Leasing office space is one of the biggest decisions your business will make. Get it right, and your team has a home that helps them do their best work. Get it wrong, and you're locked into a costly, inflexible agreement that holds you back.
The good news? It doesn't need to be complicated. This guide walks you through everything — from understanding office lease types to negotiating better terms — so you can make a confident, informed decision for your team.
What is an office lease?
An office lease is a legally binding agreement between a landlord and a tenant, granting your business the right to use a property for a fixed period.
Leases typically run from 3 to 10 years, though shorter-term options are increasingly available. The agreement covers rent, service charges, repair responsibilities, and the rights of both parties — so understanding what you're signing is essential before you put pen to paper.
Leasing (rather than buying) office space keeps your upfront costs lower, preserves capital, and gives you access to amenities and locations that would otherwise be out of reach. For most start-ups and scale-ups, it's the practical choice.
It's also worth knowing the difference between a lease and a licence — two very different agreements that are often confused. Our guide to licence agreements vs. leases breaks down which is right for your business.
Types of office space leases
Not all office leases work the same way. The type of lease determines who pays for what — and getting your head around the differences can save you a significant amount of money.
Gross lease (full-service lease)
A gross lease bundles all operating costs — property taxes, insurance, and maintenance — into a single monthly rent. What you see is what you pay.
This is the simplest option for budgeting, and it removes the risk of unexpected bills landing on your desk. The trade-off is that base rent tends to be higher, since the landlord is absorbing those costs.
Best for: Teams who want cost certainty and minimal admin.
Net lease
With a net lease, tenants pay a lower base rent but take on responsibility for some or all of the property's running costs. There are three variations:
- Single net lease: You pay rent plus property taxes
- Double net lease: You pay rent, property taxes, and insurance
- Triple net lease: You cover rent, property taxes, insurance, and maintenance
Net leases give you more visibility into specific costs, but they can make budgeting harder when those costs fluctuate.
Best for: Businesses with predictable usage who want a lower base rent.
Modified gross lease
A modified gross lease sits between the two. Landlord and tenant agree to share certain costs, with fixed amounts for some expenses and variable responsibility for others. Terms are negotiated case by case.
Best for: Businesses who want a balanced arrangement and are comfortable negotiating the detail.
Percentage lease
More common in retail, a percentage lease charges a lower base rent in exchange for a share of the tenant's revenue. It aligns landlord and tenant interests when trading conditions are strong — but adds unpredictability to your outgoings.
Best for: Retail-facing businesses in high-footfall locations.
What's the most common type of office lease?
The most common office lease in the UK is the commercial office lease — a standard contract between landlord and tenant for renting space in a commercial property. Terms vary based on location, size, and market conditions, but the framework is broadly consistent.
Not sure which type of office — leased, managed, or serviced — is right for your team? Our guide to traditional, managed, and serviced office spaces covers the key differences.
Typical office lease terms in the UK
Understanding the standard terms in a UK office lease helps you know what to expect — and what to push back on.
- Lease length is typically 3 to 10 years. Break clauses are often included, allowing either party to exit at an agreed point in the lease — usually with 6 months' notice.
- Rent reviews happen every 3 to 5 years, usually upward-only, though this is negotiable in some markets.
- Service charges cover shared costs like building maintenance, lifts, and communal areas. Ask for the previous year's figures before signing — and consider requesting a cap on future increases. Our breakdown of service charges in commercial property covers exactly what these can include.
- Repair obligations set out who is responsible for what. Full repairing and insuring (FRI) leases place most of the responsibility on you as tenant, so read these clauses carefully.
- Security deposits usually range from 3 to 12 months' rent. Newer businesses are often asked for higher deposits, but this is negotiable — particularly if you can demonstrate financial stability.
If any of these terms are new to you, our traditional office space leasing glossary explains the full vocabulary in plain English.
Short-term office lease agreements
Demand for flexible, shorter-term leases has grown considerably. Many landlords now offer agreements of 12 months or less — particularly in serviced and managed office buildings — to accommodate businesses that need flexibility as they scale.
If a short-term lease is what you need, be clear on what's included (furniture, IT infrastructure, utilities) so you can compare options fairly.
What's included in office rent?
This depends on your lease type. In a full-service lease, rent typically covers building maintenance and repairs, property insurance, utilities (sometimes), and cleaning of common areas.
In a net lease, you'll handle many of these separately. Always clarify exactly what's included before signing — "rent" can mean very different things in different agreements.
For a full breakdown of the costs beyond headline rent — including fit-out, legal fees, and maintenance — read our guide to the true cost of leasing office space.
Are utilities included in an office lease?
Sometimes. Full-service leases often bundle utilities. Net leases and some modified gross leases don't. Ask directly, and get the answer in writing.
Business rates
Business rates are separate from rent — they're set by your local council and paid directly to them. Small businesses and charities may qualify for partial relief, so it's worth checking your eligibility on GOV.UK.
How much does it cost to lease office space?
Office lease costs vary enormously based on location, size, quality, and lease type. Our complete guide to office space pricing goes into more detail, but here's an overview.
Office lease rates in London
London office rents range from roughly £30 per square foot in outer boroughs to £150+ per square foot in prime locations like the City of London or the West End. Central areas — Shoreditch, King's Cross, Farringdon, Canary Wharf — sit somewhere in between, with pricing driven by demand and specification.
Office lease rates outside London
In Manchester, prime office rents reached £43.50 per square foot in 2024, driven by strong demand for high-quality space. Bristol prime rents held at around £42.50 per square foot, with further increases expected as Grade A availability remains limited.
Deposits when leasing office space
Deposits typically range from 3 to 12 months' rent. Newer businesses may face higher requirements, but deposits are negotiable. Some landlords will accept a letter of credit or rent guarantee insurance in lieu of a large cash deposit.
Deposits are usually refundable when the lease ends or is assigned, providing the property is left in agreed condition.
How to lease office space: the key steps
Finding the right office space takes more than a quick search online. From working out what your team actually needs to signing on the dotted line, there are several stages to navigate — and the decisions you make early on will shape the terms you end up with. Here's how the process typically works.
1. Define your requirements
Before you approach any landlord or broker, get clear on what your team actually needs. How many desks? What kind of environment — open plan, private offices, a mix? Do you need meeting rooms, a reception, bike storage? And what's your budget, all in? Our office space calculator can help you work out the right size for your team.
Think about your people first. The right office isn't just the one with the best address — it's the one where your team will do their best work.
2. Research the market
Look at comparable spaces in your target area. What are similar businesses paying per square foot? What lease lengths are typical? Understanding market rates gives you leverage when it comes to negotiation.
3. Instruct a broker
A good office space broker works on your behalf, not the landlord's. They'll shortlist spaces, manage viewings, and guide you through the negotiation — often at no cost to you, since they're paid by the landlord on completion.
4. Negotiate heads of terms
Before solicitors get involved, you'll agree the headline terms with the landlord: rent, lease length, break clauses, rent-free periods, fit-out contributions. This is where the deal is really made. Our guide to heads of terms for office leases explains exactly what to expect from this stage.
Landlords often offer incentives to attract tenants — particularly in longer leases. A rent-free period at the start of the lease is common, giving you time to fit out and get settled before full rent kicks in.
5. Instruct solicitors and exchange
Once heads of terms are agreed, solicitors will draft and review the lease documents. Allow several weeks for this — multiple rounds of revisions are normal. If you're moving into a new space at the same time, our office move checklist will help you stay on top of everything else running in parallel.
Don't skip legal advice. A lease is a long-term financial commitment, and the fine print matters.
How to negotiate your office lease
Negotiation starts earlier than most people think — ideally before heads of terms are set. Here's what to focus on:
- Rent-free periods are standard on new leases. Push for as long as possible, particularly if you're taking a longer term.
- Break clauses give you an exit route if your business needs change. A break at year 3 in a 5-year lease is worth negotiating hard for.
- Fit-out contributions — sometimes called a landlord contribution — are cash from the landlord towards your fit-out costs. More common in larger deals, but always worth asking about. Before you get to that conversation, it helps to know what fit-out actually costs — our guide to how much an office fit-out costs gives you a realistic picture.
- Rent review mechanisms matter a lot over a longer lease. Upward-only reviews are standard, but the frequency and methodology are worth scrutinising.
- Repair obligations should be proportionate to the condition of the property when you move in. A Schedule of Condition, agreed at lease start, protects you from being held responsible for pre-existing issues.
Wondering whether the flexibility of a shorter or managed lease is worth the premium over a traditional one? We've explored the flexibility premium in detail to help you weigh it up.
Key office lease clauses to understand
A lease is only as good as the terms inside it. Before you sign anything, it's worth getting to grips with the clauses that will govern your tenancy — because some of them could save you a significant amount of money and stress down the line. These are the ones that come up most often, and matter most.
Break clauses
A break clause allows either party to end the lease early, usually with 6 months' written notice. Break clauses are conditional — missing the notice deadline or failing to comply with lease obligations can invalidate your right to break. Put a reminder in your calendar well in advance.
Assignment and subletting
Most commercial leases allow you to transfer (assign) the lease to another tenant, or sublet part of the space, with the landlord's consent. This is your exit route if your circumstances change significantly mid-lease. Landlords must act reasonably when considering consent requests.
Security of tenure
Under the Landlord and Tenant Act 1954, most commercial tenants have the right to renew their lease at the end of the term. Some leases are contracted out of this protection — check yours.
Can I get out of an office lease early?
Early exit is possible, but it's rarely straightforward. Your main options are:
- Break clause: If your lease has one and you've met all conditions, this is your cleanest exit. It's easy to let key dates slip — our guide to making sure you don't miss your lease expiry date is worth bookmarking well in advance.
- Assignment: Transfer the lease to another tenant with landlord approval. You may still have residual liability if the new tenant defaults.
- Subletting: Sublet all or part of the space to another occupier, again with landlord consent. You remain responsible to the landlord under the head lease.
- Lease surrender: Negotiate with your landlord to end the lease early by mutual agreement. This often involves a financial settlement.
- Lease buyout: Pay the landlord a lump sum to terminate the lease entirely. Expensive, but provides a clean break.
What are dilapidations?
Dilapidations are the repair and reinstatement obligations you carry as a tenant at the end of a lease.
Your lease will specify how you need to leave the property — typically in the same condition as when you took it (adjusted for fair wear and tear). Common obligations include:
- Repairing any damage caused during your occupation
- Removing fit-out and reinstating the space to its original state
- Replacing worn or damaged fixtures and fittings
Landlords can issue a Schedule of Dilapidations detailing required works. You can carry out the repairs yourself, agree for the landlord to do them at your cost, or negotiate a cash settlement.
Getting specialist dilapidations advice before your lease ends can save you a significant sum — particularly for larger spaces in areas like Shoreditch, King's Cross, Farringdon, Clerkenwell, and Canary Wharf. Our guide to commercial dilapidations in London covers what to expect and how to manage the process.
Stamp Duty Land Tax (SDLT) on office leases
SDLT applies to commercial leases in England and Northern Ireland. It's calculated based on the lease premium and the net present value of the rent payable over the lease term.
You have 14 days from the effective date of the transaction to file and pay. Leases with a premium below £40,000 or annual rent below £1,000 may be exempt. For a full breakdown of rates, thresholds, and exemptions, read our guide to stamp duty on commercial leases — or check the SDLT guidance on GOV.UK.
Buying vs. leasing office space
For most growing businesses, leasing wins. Here's why:
Buying requires significant capital upfront — capital that most start-ups and scale-ups need elsewhere. Leasing preserves cash, keeps your balance sheet lighter, and gives you flexibility to move as your team grows or your needs change.
The exception is if you're a large, established business with stable space requirements and access to capital at favourable rates. In that case, ownership can make long-term financial sense.
For everyone else: lease, and negotiate well.
Maintaining your leased office
As a tenant, you're responsible for the day-to-day upkeep of your space. That typically means:
- Keeping the space clean and tidy
- Reporting maintenance issues to the landlord promptly
- Not making structural changes without written consent
- Complying with fire safety regulations
Landlords are generally responsible for the structure — foundations, roof, external walls — and any shared mechanical and electrical systems.
Your lease will set out the detail. Read it.
Ready to find your next office space?
Whether you're signing your first lease or renegotiating your fifth, Tally is here to help. We work with start-ups and scale-ups across the UK to find workspaces that fit — the team, the budget, and the ambitions.
Get in touch, and let's find the right space for your people.
