Increase in rent?

ceewash

My business rent is going to be increased soon by about 8%. Landlord says it is due to inflation, rising maintenance costs and the cost of drawing up new lease. Does this sound right? Should tenant bear cost of new lease?

Atidi

ceewash wrote: »

My business rent is going to be increased soon by about 8%. Landlord says it is due to inflation, rising maintenance costs and the cost of drawing up new lease. Does this sound right? Should tenant bear cost of new lease?

What does your tenancy agreement say about rent increases, and who should bear the cost of any new lease?

Presumably if you don't like the changes, you can give up the lease can't you?

ceewash

I'm not really in position to give up lease. I've got an established business. Don't want landlord to know this.

earthstorm

can you not negotiate on the increase, explaining to LL that if you leave his premises will most likely site empty for months/years without any income.

The LL for our shop stated he was increasing ours by 7%, which i was not happy with and tried to get him down to 4% which he was not happy with until i told him to look at how many empty shops are in the town and how long have they being empty along with how many he had that were empty. This made him think and in the end he requested a 3% increase with a 4% increase 12 months later ( all in writing) which i accepted.

paddyrg

So negotiate. Find out what is also on the market and the current prices, and use that to batter your landlord back down. "Actually, with the state of the market I don't think the property is worth it just now, especially if it might rise again in the future. Been looking at xyz, they have some keen deals to get people in at the moment, although moving is a pain. How about we stage the 8% as 2% pa for the next 4 years then 1 year fixed thereafter, with a break opportunity at 2 years?"

OK, that's completely an arbitrary offer above, but he doesn't have all the power, if it takes him 2 months to get a new tenant then that's 2 years of the extra 8% lost anyway...

ceewash

Problem is it still is a good price he's charging. I can't bargain on basis of market value so just wondered if there is another angle?

paddyrg

ceewash wrote: »

Problem is it still is a good price he's charging. I can't bargain on basis of market value so just wondered if there is another angle?

If it's still ahead of the market, how about saying thank you and biting his hand off? Or offering to stage the increase over x years as above?

Atidi

You have 3 possible options as I see it.

1. Roll over and accept the landlords demands
2. Attempt to negotiate.
3. Ditch & switch. i.e. move

ceewash

Is it usual for tenants to share cost of drawing up new lease? I have read the lease but finding it difficult to understand.

paddyrg

ceewash wrote: »

Is it usual for tenants to share cost of drawing up new lease? I have read the lease but finding it difficult to understand.

All commercial leases are minefields, if you don't understand it, or even if you think you do, get legal advice from a commercial property lawyer. Unlike domestic leases you are specifically bound by what you sign, if that means paying for repairs 5 years after you go out of business so be it.

JuneS

Who do you think should pay the costs?

Landlords, like you, are in business to hopefully make money.

The only source of revenue for landlords is their tenants. So the tenant needs to pay for all the costs associated with the landlord providing the property, plus hopefully a bit of profit for the landlord.

Whether the cost of the lease is a specific one off charge paid upfront, or in this case is spread out in the overall cost of the rent, at the end of the day the tenant needs to pay - or the landlord will soon be out of business, no doubt with the outcome that you will have no choice but to move out.