Leasehold on shop

Flyonthewall

Hi.

I'm considering starting up my own business. I've researched the basic things I need to know about (wholesale, pricing, target market etc), although I'm sure if I was to take the next step I'd have other things to consider too.

However, I have found a commercial property that is in the perfect place and would be great for my business. The property is a leasehold.

I don't know much about this type of thing so is there anything I need to consider with going for a leasehold commercial property?

I want to keep the business similar to what it currently is, but I wish to sell some other products that aren't currently sold there and not sell some that are. Is this fine or are there restrictions to what you can sell? I wouldn't be changing layouts or anything. How it's set up is basically fine.

Any advice or information would be great. Thanks.

chalkie99

Above all else - Do not sign anything until you have had a solicitor (and one who is experienced in commercial leases) go through the lease. Don't persuade yourself you cannot afford to do this as it will be a false economy.

As regards useage, you haven't really given enough details to provide an answer. The best option is probably a quick call to the local authority, tell them the address and ask them if it;s ok to use it for whatever you intend to do.

Other than that, sit down and write a prroper business plan to include all your expenses which might include:

One- off costs for any premium or bond on the lease, solicitors and surveyor, shop fittings, security shutters, alarm installation, cash register, signage, etc.

Recurring costs of:

Rent

Council Rates

Water/ Sewerage Rates

Insurance

Alarm Maintenance

Heating/Lighting

Phone Line

Card Terminal

Commercial Waste Contract


........... just for starters

Good Luck!

BTW - Editing to add - Be very clear that once you sign a lease you are liable for it even if the business doesn't work out and you decide to close the shop.

Flyonthewall

chalkie99 wrote: »

Above all else - Do not sign anything until you have had a solicitor (and one who is experienced in commercial leases) go through the lease. Don't persuade yourself you cannot afford to do this as it will be a false economy.

As regards useage, you haven't really given enough details to provide an answer. The best option is probably a quick call to the local authority, tell them the address and ask them if it;s ok to use it for whatever you intend to do.

Other than that, sit down and write a prroper business plan to include all your expenses which might include:

One- off costs for any premium or bond on the lease, solicitors and surveyor, shop fittings, security shutters, alarm installation, cash register, signage, etc.

Recurring costs of:

Rent

Council Rates

Water/ Sewerage Rates

Insurance

Alarm Maintenance

Heating/Lighting

Phone Line

Card Terminal

Commercial Waste Contract


........... just for starters

Good Luck!

BTW - Editing to add - Be very clear that once you sign a lease you are liable for it even if the business doesn't work out and you decide to close the shop.

Thanks

Basically the shop is a newsagents. I'm happy to still sell sweets and soft drinks, but I'm looking to sell books instead of the rest of the things. Would this be alright or would I need to call the local authority still?

Flyonthewall

While I think about it, it also has a flat with it. Would I be able to rent this out and is there anything I need to look out for regarding it having a flat as well?

paddyrg

The flat may not have separate access, so only be accessible through the shop, and so not be up to spec for rental - better move in yourself and rent out your current place. The point about commercial property lawyers is important - unlike consumers who have various statutory protections, in business pretty much anything short of tax fraud or murder is fair game, so there can be all kinds of clauses which make a big difference. For instance, you may have to sign up for a long time with no get-out, and be responsible for all repairs... or not... but if you have your own lawyer you can know for sure.

Flyonthewall

paddyrg wrote: »

The flat may not have separate access, so only be accessible through the shop, and so not be up to spec for rental - better move in yourself and rent out your current place. The point about commercial property lawyers is important - unlike consumers who have various statutory protections, in business pretty much anything short of tax fraud or murder is fair game, so there can be all kinds of clauses which make a big difference. For instance, you may have to sign up for a long time with no get-out, and be responsible for all repairs... or not... but if you have your own lawyer you can know for sure.

I live at home with my parents, I think they'd be a bit annoyed if I rented their home out I think there may be access around the back of the shop. However, my thought was that my friend wants to move out so going through the shop would be fine anyhow, I just wanted to know whether I'd be able to rent it to her or whether I'd have to go a different way about it.

Ok, thanks. It has recently been refurbished so at least I wouldn't have to worry for a while about that I shouldn't imagine. I will have to look into who is responsible for upkeep/repairs though. It says it's on a new lease from 2010 so I'm guessing if the people now are going after just a few years (if that) then I'd be alright to do the same, but obviously I'll check. Hoping it'll be a lasting business though lol.

paddyrg

They may be leaving after a few years, but may still be under contract until someone else comes in...basically they could be still paying rent on it and praying someone else will take it on. In fact, the fact they are trying to get out so soon would make me more nervous than confident. Also, a recent refurb may be structural, or skin deep. This is why you spend real money on real lawyers - if you can't afford to do that, you can't afford the lease.

If you're living at home and thinking of letting a friend who's still living at home come and lease flat is a big deal - you become a commercial landlord right into the mix, so have even more headaches and responsibilities and obligations. This is a big deal.

Flyonthewall

paddyrg wrote: »

They may be leaving after a few years, but may still be under contract until someone else comes in...basically they could be still paying rent on it and praying someone else will take it on. In fact, the fact they are trying to get out so soon would make me more nervous than confident. Also, a recent refurb may be structural, or skin deep. This is why you spend real money on real lawyers - if you can't afford to do that, you can't afford the lease.

If you're living at home and thinking of letting a friend who's still living at home come and lease flat is a big deal - you become a commercial landlord right into the mix, so have even more headaches and responsibilities and obligations. This is a big deal.

True. The shop has been there years and at a glance looks fine, but obviously I would inspect it properly before going any further. Before the latest owners there may have been someone else for a number of years, but previous to that I think one person ran the newsagents for years and years. I do think the shop must do alright and hopefully with what I want to do it'll be fine.

I'd consider the flat option more after getting the shop set up and running, but just briefly, what else would be involved if I became a commerical landlord?

Pennywise

Flyonthewall wrote: »

However, my thought was that my friend wants to move out so going through the shop would be fine anyhow

No it wouldn't be fine as there'll be all kinds of problems if there's no separate access. You'll have problems getting business insurance as they won't like a third party having access to the shop. Maybe not separate supplies for power, water, etc. It could open a can of worms which could cost you. That's a perfect example of why you need a good commercial lawyer to go through it all. Make no assumptions - check and double check every aspect.

Flyonthewall

Pennywise wrote: »

No it wouldn't be fine as there'll be all kinds of problems if there's no separate access. You'll have problems getting business insurance as they won't like a third party having access to the shop. Maybe not separate supplies for power, water, etc. It could open a can of worms which could cost you. That's a perfect example of why you need a good commercial lawyer to go through it all. Make no assumptions - check and double check every aspect.

There is access around the back. All I really wanted to know was whether I could rent it out to my friend if it is a leasehold as I don't know much about how they work.

paddyrg

I don't see why the flat ought not be lettable, but it really does make things complicated (less so with separate access though.)

Is it something I would want to take on? Well I'd have a long hard look first. The commercial lease might have all kinds of covenants that could affect the viability, and there may be other reasons to be wary. Friends find it easier not to be regular with rent, especially if she is also younger and not used to dealing with life and cashflow. Bills will come in, or a good night out might take priority. A friend will also be harder work to evict. It isn't a relationship that is likely to end well, much the same as lending friends money, but worse. Your insurance might be higher, as someone with a washing machine problem upstairs could be ruined stock and shop and building fabric all to sort out at once, whilst at the same time they're bleating on about having to use the laundrette whilst you're unable to trade.

I'd really strongly suggest walking before running, the learning curve will already be steep enough.