Why pharmacy owners should review their lease

Here are five key areas every pharmacy owner should understand.

1. Repair obligations

Do you know exactly what parts of the property you are responsible for repairing?

Some leases make the tenant responsible only for the interior. Others go much further and require the tenant to repair the whole property, including structural elements, roofs and external walls.

The difference can be very expensive, particularly when it comes to dilapidations at the end of the lease. What appears to be a standard repair clause could result in liabilities running into tens of thousands of pounds or more.

2. Break clauses

If you may want to relocate, sell, downsize, expand, or simply negotiate better terms, it is important to know whether your lease contains a break clause.

A break clause allows the lease to be ended early, but the conditions attached to it can be strict. Missing a deadline, serving a break notice incorrectly, or failing to comply with the conditions can mean losing the right to break altogether.

Pharmacy owners should know not only whether a break right exists, but also when it can be exercised and what must be done to use it effectively.

3. Rent review clauses

Many commercial leases contain rent review provisions, which are usually on an upward-only basis. This means the rent can increase at review, but will not go down even if market rents have fallen.

It is worth checking when the next rent review is due, how the new rent will be assessed, and whether there are any assumptions or disregards that could affect the outcome.

Understanding the rent review mechanism in advance can help you plan ahead and, where appropriate, prepare for negotiations.

4. Permitted use

Your lease should clearly allow the premises to be used as a pharmacy.

However, pharmacy businesses have changed significantly in recent years, with many owners offering additional services such as consultation rooms, vaccinations and healthcare services.

If the permitted use wording is too narrow, it could restrict how you operate or expand the business. It may also create issues if landlord consent is required before changing or broadening the use.

5. Renewal rights

Not all leases benefit from the protection of the Landlord and Tenant Act 1954.

If your lease is protected, you will usually have a statutory right to request a new lease when the current term expires, subject to conditions. If it is excluded from the Landlord and Tenant Act 1954, your right to remain at the premises will depend on what you can agree with your landlord.

This makes timing important. If you want to stay, negotiations may need to begin well before the lease expiry date.

Final thought

I act for pharmacy owners across England and Wales, helping them review, renew, renegotiate and assign leases so that their property arrangements support, rather than restrict, their business plans.

If you are unsure how your current lease stacks up, it is worth reviewing it before your next rent review, break date, lease expiry or if you are looking to sell your business. A short review now can help identify risks early and put you in a stronger position going forward.