How to Review a Commercial Lease Turnover Rent Clause in England

Review a turnover rent schedule by naming the rent machine first: Base Rent plus a percentage of Gross Turnover above a threshold, then mark include/exclude, reporting, audit cost-shift, and whether rent-free suspends the percentage. The agent’s “8% is a simple top-up” email is not the lease. Narrow toward the heads, or walk before you commit projections.

On this draft, the 8% attaches to Gross Turnover above £200,000 on top of Base Rent of £18,000 a year — not pure turnover, not greater-of, and not open-market review. The typical mistake is treating the percentage as a soft top-up while online sales, VAT, rent-free, and audit stay “accounting noise.”

Unit 7 at Lemon Quay Arcade, Truro, is the draft packet — the lease file set Lemon Clay Ltd is reviewing under English law. Heads of 18 September 2026 carved VAT, refunds, tips, and warehouse online out, asked for an annual certificate, yearly audit with a 3% cost-shift, and rent-free on base and turnover. Schedule 4 and the 8 October email disagree. Signature is marked for Friday 16 October 2026.

Disclaimer: Checkory provides AI support, not legal advice. Consult a qualified lawyer for binding decisions.

Which rent model is this draft — base, percentage, or threshold?

This draft is Base Rent plus 8% of Gross Turnover above a £200,000 threshold in each Turnover Year. Name that rent machine before you turn to online sales. It is not pure turnover and not greater-of.

Turnover rent is a contractual pricing mechanism, not a statute. Sprintlaw’s February 2026 checklist maps definition, threshold, reporting, and audit. In practice, open the heads before the email. Base is £18,000 a year. This is not the open-market review model in the rent review clause guide. England and Wales only — not Scotland LBTT. Do not invent a sample year against the £200,000 line.

Reading the Gross Turnover definition against the heads

Clause 4.3 defines Gross Turnover as sums received or receivable from business at or from the Premises, including in-store sales, click-and-collect collected at the Premises, and online sales attributable to the Premises, plus VAT, tips, and gift-card face value, with no refunds carve-out. The email’s “online never counts” line contradicts that wording.

The CMS landlord checklist treats Gross Turnover as the most negotiated point: store-stock fulfilment usually counts; warehouse fulfilment is the heads’ carve-out. Harper James notes VAT is normally out. Field Seymour Parkes flags vouchers and returns. 2026 notes from Shoosmiths and DWF show why click-and-collect wording must be express. Treat them as background, not a finding on Unit 7. Ask for the heads’ exclude list before Friday.

Where reporting, certificates, and confidentiality sit in Schedule 4

Clause 4.4 requires a monthly statement within 10 days and an annual Turnover Certificate within 30 days. Clause 4.7 lets the landlord estimate Gross Turnover if the certificate is late. Monthly figures are not optional admin. SO Legal and CMS treat late defaults as bargaining chips. Heads asked for annual; the draft adds monthly. Mark that gap.

Schedule 4 sits in the registrable lease with no side deed. Harper James and CMS flag Land Registry visibility. If the 8% should stay off the public lease, ask for a side deed. A break that needs a certificate is a separate trap — see the break clause review.

Marking audit rights: notice, frequency, and who pays

Clause 4.5 lets the landlord audit books, POS, and bank statements on 48 hours’ notice as often as reasonably required, with the tenant paying all costs. The email’s “landlord always pays” line is not clause 4.5. Sprintlaw’s list is once per year unless a material discrepancy, reasonable notice, and landlord pays unless underpayment exceeds an agreed margin. Calmsulting cites about 2% as a common cost-shift; the heads asked for 3%. Log notice, frequency, and cost-shift. Do not invent an understatement for Unit 7.

Where rent-free, keep-open, and base-rent review meet the percentage

Clause 4.6 gives three months’ rent-free on Base Rent only. If Turnover Rent is calculated after deducting base and base is nil, the top-up can rise — the percentage holiday is missing. CMS and Brodies describe that trap. Brodies also warns base-rent review can inflate if turnover provisions are not disregarded. That is one fence only; open-market assumptions belong in the rent-review guide. Insurance rent is a different reserved sum. Clause 4.7 keep-open supports a turnover model; mark carve-outs only.

First-pass turnover-rent checklist before you commit projections

Write one log before Friday. The RICS Code says heads should answer core rent questions and turnover formulas need care. It does not rewrite Schedule 4. For the whole lease, use the office lease checklist.

Narrow Schedule 4 or walk before Friday

Do not commit sales projections while Gross Turnover, reporting, audit cost-shift, and rent-free still rest on the 8 October email. Narrow means matching the heads: VAT, refunds, and tips out; warehouse online out; click-and-collect listed expressly if it counts; annual certificate; yearly audit on 14 days’ notice with landlord paying unless understatement exceeds 3%; rent-free on base and turnover; keep-open carve-outs; a side deed if the percentage should stay off the register.

Walk means do not sign this Schedule 4 and do not treat the email as deleting clause 4.3. A first-pass — a machine reading that extracts clauses before a person reads every page — can mark the limbs. Use document analysis and the commercial lease review tool as a first-pass on the file. The tool is not the decision. Narrow or walk before Friday 16 October 2026.