Permitted use describes the type of business that you can run in your shop.
The permitted use is specified in your retail lease. Before signing your lease, you should also check with the local council that the shop you plan to rent can be used for the business you have in mind.
You can’t use the shop for any other type of business without the written consent of both the landlord and the council.
A tenant and landlord can negotiate to try to produce a clear description of permitted use that balances their different interests.
Permitted use is different to exclusive use.
Broad or narrow definition
A landlord is likely to want a permitted use that allows them to keep control over the shop or building and the way it is used.
For example, with a broad description like 'retail shop', the tenant can sell whatever goods they like. The shop could turn out to be a business that offends other retailers, shoppers and even nearby residents, but the landlord doesn’t have much control.
The tenant will often prefer a permitted use that is broad enough to allow them to grow and diversify their business. For example, if the permitted use is a hairdressing salon, the retailer might want to also offer beauty treatments.
If you want to change or expand the permitted use during the term of your lease, you must write to the landlord seeking their consent.
If you don’t stick to the permitted use or get consent to change it, you may have breached your lease, which then allows the landlord to terminate it.
Selling the business
When it comes time to sell the business or assign the lease, the current tenant benefits from a broader description of permitted use.
A broader definition gives the new tenant some flexibility to make changes to the business. However, the new tenant will be bound by the existing permitted use, unless the landlord agrees to change it.