Renting a commercial property

LittleMissKitty

Hi, I've had a search around the forum but couldn't find anyone asking similar so I thought I'd start a new thread (wasn't sure whether to put this on the buying/renting forum instead?)

Basically I'm looking to rent my first premises. I've never rented before either residentially or commercially and wondered if anyone had any advice or things I need to watch out for?

We (husband and I) have found a property we want and have offered on it. They're looking to license it for a year initially and then look at leasing longer term assuming the first 12 months goes well. They're responsible for all structural and external works and we would have internal responsibilites. We've checked rates, insurance etc and are happy to go ahead.

At the moment we're waiting to hear back from the agents as to whether the owner of the estate is happy with us as prospective tenants (everyone seems to be on holiday - we've been waiting 4 weeks so far! :mad: ). Assuming they say to go ahead what happens next? My business is a start-up so I'll never pass a credit-check based on business accounts, do you think they'd be happy to take the full years rent upfront? Or will we be able to use our personal accounts for the credit check? I could probably get a guarantor, do you think that is likely to help?

I know this is all just conjecture at the moment but I've had 4 weeks to worry about it and I figured someone with previous experience may have some words of wisdom for a nervous first timer!

TIA!

Pennywise

The main thing is to get a commerical law society to check over the lease before you sign it and ask them to explicitly set out your obligations, liabilities and rights in plain English you can understand. You particularly need to know:-

1. What you have to do when you vacate, i.e. do you have to re-decorate, re-carpet, etc, and if so, to what standard, i.e. the same as it was when you started, or to an "as new" condition. What happens if you don't, i.e. can they do the work and send you the bill?

2. When can you vacate? What notice period do you have to give? What are the trigger dates for leaving? It's OK having a one year term to start, but does the lease tie you in, to say, 3 or 5 or 10 years if you stay beyond the year? Business leases aren't like homes - you can easily find yourself tied in for years to a lease you don't need/want.

3. What rights do you have to stay, i.e. if you set up a good business and want to stay there, can you force an extension to the lease or can the landlord throw you out when the lease expires? (There is an Act of Parliament giving you rights to stay and for lease to be extended, but the landlord can "opt out" in the lease - you need it checking that he's not opted out).

4. Rent - you need certainty about future rent increases - you don't want the landlord to be able to double your rent on a whim. Some leases provide for rent to be decided on market value - you don't want to end up paying more rent if you increase the value of the property, i.e. by improving it!

Main thing is that you take photos etc when you first move in to "prove" it's condition, i.e. carpets, decoration, etc., and do an inventory of fixtures & fittings - helps to prove the condition if you have to leave it "as was" at the end. You may wish to get a surveyor to inspect the property to highlight any repairs/costs that you may become liable to - nothing worse than having to pay costs only to then be thrown out at the end of the term with nothing to show for it.

NEVER, EVER make assumptions with a business lease - they are VERY different to residential leases.

LittleMissKitty

Thank you so much I may print your reply off and stick it in my 'info' folder.

I had no idea of the lease extension bit at all!

paddyrg

Residential leases have a lot of consumer protection and housing laws to protect you from extreme terms - no such thing in commercial property, so what you sign up for is exactly what you get. If, for instance after the first year the next term is 10 yrs, even if the company hits trouble it is still contracted for a decade.

Flat_Eric

How long do you want to rent the premises for and what is your proposed use/business idea? (PM me if you don't want to post the latter).

paulwf

4 weeks wait is nothing, landlords drag things out forever...no idea why as it loses them rent!

Don't be too keen offering them all the rent up front. To get a good deal you have to play hard to get, you are doing them a favour by renting their unit. Commercial rent negotiations always start from a position of offering half what is expected and requesting at least 6 months rent free, from there the real negotiations start

daveyjp

Re 3. And opting out of Various acts. The landlord can't do this without you knowing. He needs you to sign a specific declaration excluding protection from the Landlord and Tenant Acts.

http://www.charlesrussell.co.uk/UserFiles/file/pdf/Real%20Estate/Guides%20and%20info%20sheets/Excluding%20the%20Landlord%20and%20Tenant%20Act%201954.pdf