A Guide to Commercial Lease Agreements in Zimbabwe

Part 1: Commercial vs. Residential - What's the Difference?

While both are rental agreements, a commercial lease is a different beast entirely. Residential leases have many built-in protections for the tenant. Commercial leases, on the other hand, assume that you are a business entity entering into a negotiation. The principle of "caveat emptor" (let the buyer beware) applies much more strongly.

Almost every aspect of a commercial lease is negotiable, and the terms you agree to will have a direct impact on your business's finances and operations for years to come. Getting it right from the start is critical.

Part 2: Key Clauses to Scrutinize Before You Sign

A commercial lease can be a long and intimidating document. However, a few key clauses carry most of the weight. You must understand these fully before committing.

1. The Rent Clause

This seems simple, but look beyond the monthly figure. You need to check for:

• Rent Review/Escalation: How and when will the rent increase? Is it a fixed percentage each year, or is it tied to market rates? An unclear escalation clause can lead to sudden, unaffordable rent hikes.
• Currency: Is the rent specified in USD or ZWL? This has significant implications for your long-term budgeting.

2. Operating Costs (or "Op Costs")

This is one of the biggest pitfalls for new business tenants. In most commercial leases, the tenant is responsible for a share of the entire building's operating costs. This is in addition to your rent.

• What's Included? Ask for a detailed breakdown. Op costs can include security, municipal rates, water for common areas, property management fees, and general maintenance.
• How is it Calculated? Your share is usually based on the percentage of the total building space that you occupy. Ensure this is clearly defined.

3. Permitted Use

This clause defines exactly what type of business you are allowed to operate from the premises. A vague or restrictive "Permitted Use" clause can severely limit your business's ability to adapt or grow.

• Be Specific: Ensure the clause is specific enough to cover all aspects of your current and planned operations. If you run a café, it should explicitly allow for the sale of food and beverages for on-site consumption.
• Exclusivity: Can you negotiate a clause that prevents the landlord from renting another unit in the same complex to a direct competitor?

4. Repairs and Maintenance

In a commercial lease, the tenant is often responsible for far more than in a residential lease. You must be clear on who fixes what.

• Tenant's Responsibility: You will almost always be responsible for all non-structural, interior repairs (e.g., plumbing, electrical, air conditioning).
• Landlord's Responsibility: The landlord is typically only responsible for the main structure of the building—the roof, foundations, and outer walls.