Business Premises Lease/Tenancy

Savvy_Sue

If it all goes belly up, 5 years seems to me like an awful long time to be committed to paying the rent, so I'd want much much earlier break clauses, and perhaps more frequent. Especially in a new development, where you can have absolutely no idea who your neighbours will be, what the footfall is like to the development as a whole, and what the footfall past your premises will be.

Especially with fast food. Look around: there are food outlets all around. They come, they go, sometimes within months. Even if you think you could pass the lease (either for the premises or the equipment) on to some other hopeful, you could still be responsible. So if they go belly up, you can still be faced with what you thought were their bills.

Read other threads here about coffee shops, fish and chip vans. I know we all sound ultra cautious - I am, by nature, and for that reason I'm never going into catering! :rotfl: Actually, I admit, I'm temperamentally unsuited to running my own business these days, might have done it when I was younger.

You don't want nay-sayers, but what you NEED is people who have been there, done that, and either got the t-shirt or walked away with nothing. Then you need to work out what the difference between the two is: those who still have the t-shirt (just) have either made or just avoided all the classic mistakes and learned from them.

I hope your solicitor has plenty of experience of commercial leases. If not, ask him to recommend someone who does. Someone who spends most of their time on house conveyancing just doesn't cut it, IMO.

tushingham

Savvy_Sue wrote: »

If it all goes belly up, 5 years seems to me like an awful long time to be committed to paying the rent, so I'd want much much earlier break clauses, and perhaps more frequent. Especially in a new development, where you can have absolutely no idea who your neighbours will be, what the footfall is like to the development as a whole, and what the footfall past your premises will be.

Especially with fast food. Look around: there are food outlets all around. They come, they go, sometimes within months. Even if you think you could pass the lease (either for the premises or the equipment) on to some other hopeful, you could still be responsible. So if they go belly up, you can still be faced with what you thought were their bills.

Read other threads here about coffee shops, fish and chip vans. I know we all sound ultra cautious - I am, by nature, and for that reason I'm never going into catering! :rotfl: Actually, I admit, I'm temperamentally unsuited to running my own business these days, might have done it when I was younger.

You don't want nay-sayers, but what you NEED is people who have been there, done that, and either got the t-shirt or walked away with nothing. Then you need to work out what the difference between the two is: those who still have the t-shirt (just) have either made or just avoided all the classic mistakes and learned from them.

I hope your solicitor has plenty of experience of commercial leases. If not, ask him to recommend someone who does. Someone who spends most of their time on house conveyancing just doesn't cut it, IMO.

thanks for all the advice. the nay-sayers bit was just laziness on my part so that i dont have to wade through lots of info to the juicy bits of advice i asked for!!!

Im fairly cautious by nature myself hence asking questions here and beginning to do some (very) early research.
will keep listening as ive learnt lots already.

t

chalkie99

:eek::eek::eek:

15 years at 17k = £255k!

A legal contract to pay a quarter of a million pounds on rent alone with no get out clause

Personally, I would be aiming at a reduction in rent, 6 months rent free on a 5 year lease with a break clause at 3 years. All based on written guarantees that the other units would not be let to conflicting interests.

There is absolutely no point in being the first to sign up for an independent takeaway only to find your neighbours are McDonalds, KFC and Subway as Savvy Sue has said.

Savvy_Sue

chalkie99 wrote: »

:eek::eek::eek:

15 years at 17k = £255k!

A legal contract to pay a quarter of a million pounds on rent alone with no get out clause

:rotfl: see, I'm not a numbers person. But if I'd done those sums, my reaction would have been the same! :rotfl:

tushingham

chalkie99 wrote: »

:eek::eek::eek:

15 years at 17k = £255k!

A legal contract to pay a quarter of a million pounds on rent alone with no get out clause

Personally, I would be aiming at a reduction in rent, 6 months rent free on a 5 year lease with a break clause at 3 years. All based on written guarantees that the other units would not be let to conflicting interests.

There is absolutely no point in being the first to sign up for an independent takeaway only to find your neighbours are McDonalds, KFC and Subway as Savvy Sue has said.

Thanks chalky and sue!
This was why my main area of questioning was the break clause. The outline agreement does have a 3 month rent free period but think i'll aim for 6months. It also has exclusivitiy agreemnt for no other 'kebab' takeaway but i ive been given the impression they wont agree to exclujsivity agaiunst the likes of aa subway or McD's or coffee shop.
I can but try though!!

Cant believe how many top tips ive picked up in the last 24 hours!!!
cheers guys

t

Flat_Eric

tushingham wrote: »

Hi,

Thanks for the reply. Im very very early on in disucssions with the landlord/agent of this new site and have made no commitment. I thought I should investigate in detail before agreeing to anything.
I already have a firm of solicitors I have used in the past and they will be my port of call when I have decided whether this is potentially viable or not. I will also follow the excellent advice about surveyors and agents.

So far I have been emailed a draft outline agreement and asked to feedback my thoughts. Before I replied to them I thought I'd see what might be possible from the experience of others here and then just let them know the areas I would want to negotiate (via my solicitor). I believe I will be one of the very first tenants of the complex so think the developers are at an early stage too. The development wont be complete til approx June 2012 so i've seen a potential opportunity and am doing my research early-ish.

The document is 3 pages long and the rent is £17k per year for 700sq ft with an offer of £31k if i take 2 units at 1400 sq ft (but i dont need that much space so going to be sticking with 1 if i do pursue this).

Im looking at the premises as a fast food takeaway. The document mentions 15 year lease and 5 yrly upward only rent reviews. Not much more detail on this section but have been told to give them my opinion on the rough principle and more detail re-reviews will be added. Im happy with 15 yrs but there is no 'get out clause' and i think i'd like to add the option for a notice period every 5 yrs or so. Wanted to know if that would be reasonable before entering further discussion with them or engaging my solicitor.

Thanks again for all help so far and any new advice you can alll give.

t

ps- in terms of the business idea itself, im happy to also receive any top tips from those with experience in the field but not too much in the way of nay-sayers please!!

The three page doc. you refer to sounds like Heads of Terms. The Lease will be based on these so if there is something you are not happy with - get it included/omitted as the case may be! I suspect the Lease will be an all singing, all dancing Lease and no break clause ? :eek:Can you really commit for that length of term and at the rent level you have indicated ? As someone has already mentioned thats £255,000.00 and thats before the upward only rent reviews.

Its good you have a solicitor lined up but make sure you are represented by someone who is a specialist in commercial matters. A solicitor specializing in residential conveyancing will not cut the mustard.

A Lease term of 15 years will require registration at HM Land Registry. You may also have to pay Stamp Duty - speak with your solicitor about this.

You need to make sure that the unit you want to Lease has the appropriate planning permission for the use you want. i.e. you mentioned fast food Your solicitor will be able to investigate this for you - typically by carrying out a Local Search (which you will have to pay for) depending on the local authority - £80 - £250 ? There will be other searches but you can discuss these with your solicitor.

chalkie99 wrote: »

:eek::eek::eek:

15 years at 17k = £255k!

A legal contract to pay a quarter of a million pounds on rent alone with no get out clause

Personally, I would be aiming at a reduction in rent, 6 months rent free on a 5 year lease with a break clause at 3 years. All based on written guarantees that the other units would not be let to conflicting interests.

There is absolutely no point in being the first to sign up for an independent takeaway only to find your neighbours are McDonalds, KFC and Subway as Savvy Sue has said.

AGREE

Savvy_Sue wrote: »

:rotfl: see, I'm not a numbers person. But if I'd done those sums, my reaction would have been the same! :rotfl:

AGREE AGAIN!

Savvy_Sue

kebabs, eh? Are you SURE you are in the right place for kebabs?

See, I think 'kebabs', I think '3 am rolling out of nightclubs street-level vendor'. I don't think 'new development with major retailers', aka shopping centre.

tushingham

Savvy_Sue wrote: »

kebabs, eh? Are you SURE you are in the right place for kebabs?

See, I think 'kebabs', I think '3 am rolling out of nightclubs street-level vendor'. I don't think 'new development with major retailers', aka shopping centre.

heheh. im sure thanks. just imagining a kebab shop in the centre of bluewater or the bullring!! hahahaha

no its a new, small, complex in a new housing estate of the right demographic. the retailer is one of those smaller versions the major supermarkets open in local complexes.

I know the area and demographic well as i work nearby. I also know what the planners have in storeapproved for the future in terms of housing, expansion, and access. thats what got the ball rolling with my investigations in the first place.
im excited at the thought of doing this but being very very cautious!
still investingating many aspects (not just lease) of whether this could be a viable business opportunity or not.

[Deleted User]

If you are going into your own business become a numbers person quick it will affect so much of what you do , not only about the setting up of the premises but every thing you buy and sell needs costings done. You could be the worlds best cook but if you do not sell it for a profit that will seem along 15 years

dottygirl

Hi Im about to open a coffee shop that used to be a hairdressers! I had a call from my solicitor to say he has received a letter from the landlords lawyer to say they want £1200 to grant me a licence to change the interior of the shop! Must admit I didnt see this coming. My solicitor did say this was standard practise but it was a large amount!I wish you well x