Leasing/renting a shop - advise required on starting up

mrs_sparrow

Hi all,

I need some advice and I am not sure where I need to start.

I have spoken to the council in regards to leasing a shop. I have told them we are interested in 1 of 2 shops and they have sent me over some basic T&C - one of which is that I rent it 'as is. I have responded that I do not agree to certain T&C - that is in writing already. Namely and most importantly: The property to be let in its current state of repair which will be the subject of a schedule of condition. I do not know what this means.

I have a choice of 2 - more or less the same price pa:

Shop 1 is in great condition already but needs a lot of partioning added

Shop 2 has the perfect layout with lots of partioning already there but is in a dreadful state with wires everywhere (and I mean, everywhere), ceiling caved in in one place and window smashed in 2 places (but intact). I have responded that I want the above repaired and safety checks carried out with anything else being subject to a survey being done. They have said they will get a quote for repairs to be done (??). However, in a previous meeting he did tell me that they had funding in place for stripping all the partitioning out and getting it back to how shop 1 looks so they were prepared to do that before I took it. Surely renting a property that is safe is part of them being a landlord?

So I also need to know at what point I need a solicitor please and what do they do? I know I need one to check over the contract, but do I need one for all these emails going back and forth and before I ask anything else? I just sent over my information to get a reference as I figured I could go nowhere without that. And it was at this time I said I wanted the repairs to be done and the rent to be negotiated further.

And how do I go about getting a survey - I assume that I need this done before signing any contract. Do I just book someone and ask them to arrange with the council?

I have not rented a shop before so it is all new to me and I am not sure where I need to go to ask - but there is a first time for everything so thanks for any help or advice you can give me.

Forgot to add - I am a VAT registered sole trader.

Rappa

mrs_sparrow wrote: »

Hi all,

I need some advice and I am not sure where I need to start.

I have spoken to the council in regards to leasing a shop. I have told them we are interested in 1 of 2 shops and they have sent me over some basic T&C - one of which is that I rent it 'as is. I have responded that I do not agree to certain T&C - that is in writing already. Namely and most importantly: The property to be let in its current state of repair which will be the subject of a schedule of condition. I do not know what this means.

I have a choice of 2 - more or less the same price pa:

Shop 1 is in great condition already but needs a lot of partioning added

Shop 2 has the perfect layout with lots of partioning already there but is in a dreadful state with wires everywhere (and I mean, everywhere), ceiling caved in in one place and window smashed in 2 places (but intact). I have responded that I want the above repaired and safety checks carried out with anything else being subject to a survey being done. They have said they will get a quote for repairs to be done (??). However, in a previous meeting he did tell me that they had funding in place for stripping all the partitioning out and getting it back to how shop 1 looks so they were prepared to do that before I took it. Surely renting a property that is safe is part of them being a landlord?

So I also need to know at what point I need a solicitor please and what do they do? I know I need one to check over the contract, but do I need one for all these emails going back and forth and before I ask anything else? I just sent over my information to get a reference as I figured I could go nowhere without that. And it was at this time I said I wanted the repairs to be done and the rent to be negotiated further.

And how do I go about getting a survey - I assume that I need this done before signing any contract. Do I just book someone and ask them to arrange with the council?

I have not rented a shop before so it is all new to me and I am not sure where I need to go to ask - but there is a first time for everything so thanks for any help or advice you can give me.

Forgot to add - I am a VAT registered sole trader.

So this shop is actually owned by the council?

You say the property to be let in its current state of repair which will be the subject of a schedule of condition. I do not know what this means.
It basically means it'll be let as is, and that a record of that condition will be recorded as part of the contract.
Probably of even more importance is what state they expect it to be returned in at the end of the lease! :eek:

You ask when you should get yourself a solicitor
By the questions you are asking (and to an extent, not asking ), I would suggest asap!
Commercial leases can be a real nightmare, even for the most knowledgeable/experienced.

Regarding a survey, may I enquire as to why you want one?
Whatever the reason, yes you appoint a surveyor and make arrangements with the LL/agent to allow access. (some surveyors will do the arranging themselves)

paddyrg

There's nothing in a commercial lease that says the building mustn't be a deathtrap, do not make any assumptions based on consumer rights/expectation! I suggest getting your own lawyer involved ASAP - for instance are you aware a commercial lease as a sole trader might make you responsible to repair the roof in 2 years time even if your business folded in 18 months.

mrs_sparrow

Thank you both for your input, I will see if I can find a solicitor tomorrow. I did not know whether I had to wait a while or email with (what I guess are) stupid questions but when you start from the beginning it is hard to know when I needed one.

Yes, I do understand the implications of the repair lease too. The shops in this parade are all very long standing businesses and I feel that I can endure the long term too.

I have been offered an amazing opportunity to supply part of a school PE kit - which will be mandatory - to at least 2 local secondary schools and, to be able do this, I need a shop. Once I have the shop I can then approach the other 6 schools in the area. The potential is massive, there will be sales that come from the parents bringing their children to me too. I was approached by one school when I moved into my pop up - there is nowhere selling what I do in the local area so, if these items are made mandatory, there is only one place to get them from. Me.

I already have a small pop up but I cannot offer the service from there, it is simply not big enough for stock and to have so many visitors (especially in the summer holidays).

Everything in life is a risk, isn't it? However, I have already told them I will not take it as it is and, I will choose unit 2 if they do not want to do the work to clear it up. They either want someone in there, or they do not really and it has been empty for a year so far.

mrs_sparrow

Just to add, when we went to see if the man did say that it was going to be made to the same standard as the first one we had seen - which was immaculate. We are happy to do all the decorating ourselves but not the electrics, not the glass (which could run into thousands before we start), not the hole in the ceiling.

I thought I needed to have a survey done...... only because when I initially asked about another unit he told me that it was under offer and their surveyor was currently looking at it. This is why i thought I needed one.

HatAndScarf

mrs_sparrow wrote: »

Thank you both for your input, I will see if I can find a solicitor tomorrow. I did not know whether I had to wait a while or email with (what I guess are) stupid questions but when you start from the beginning it is hard to know when I needed one.

Yes, I do understand the implications of the repair lease too. The shops in this parade are all very long standing businesses and I feel that I can endure the long term too.

I have been offered an amazing opportunity to supply part of a school PE kit - which will be mandatory - to at least 2 local secondary schools and, to be able do this, I need a shop. Once I have the shop I can then approach the other 6 schools in the area. The potential is massive, there will be sales that come from the parents bringing their children to me too. I was approached by one school when I moved into my pop up - there is nowhere selling what I do in the local area so,
I already have a small pop up but I cannot offer the service from there, it is simply not big enough for stock and to have so many visitors (especially in the summer holidays).

Everything in life is a risk, isn't it? However, I have already told if these items are made mandatory, there is only one place to get them from. Me.them I will not take it as it is and, I will choose unit 2 if they do not want to do the work to clear it up. They either want someone in there, or they do not really and it has been empty for a year so far.

Sorry to burst your bubble, but I really think you need to get the facts in writing.

No school is going to make a uniform change (in this case related to their sports/PE kit) where the only possible source is from what is, by definition a 'here today, gone tomorrow' business
A pop up shop doesn't typically run more than 3 months, and often much less.
What will happen to their policy change if, come next Summer, you haven't opened the shop?

Similarly, no school is going to consider a uniform change based on a possibility you might open a shop to stock that specific item.

I think time to take a step, or quite a few, back, and start again from the beginning with the basics.
A solicitor, or maybe a couple, are a good place to start; one to look over the lease and another to look over any exclusivity contracts you may be awarded.

mrs_sparrow

HatAndScarf wrote: »

Sorry to burst your bubble, but I really think you need to get the facts in writing.

No school is going to make a uniform change (in this case related to their sports/PE kit) where the only possible source is from what is, by definition a 'here today, gone tomorrow' business
A pop up shop doesn't typically run more than 3 months, and often much less.
What will happen to their policy change if, come next Summer, you haven't opened the shop?

Similarly, no school is going to consider a uniform change based on a possibility you might open a shop to stock that specific item.

I think time to take a step, or quite a few, back, and start again from the beginning with the basics.
A solicitor, or maybe a couple, are a good place to start; one to look over the lease and another to look over any exclusivity contracts you may be awarded.

What?? Where did all that come from??? Burst my bubble? There are a whole load of (incorrect) assumptions in your post.

I have actually been trading now for 12 years, running a legitimate VAT registered business from a unit at my home address, I am registered with the council planning department but it is word of mouth and I do not advertise. My 'pop up' shop rented is on a month by month basis and serves a different kind of clientele in a different area of town, I have been briefly advertising but, again it is word of mouth. I sell the items I have been selling for 12 years, nothing different. The items that the school want are these items. There are several businesses built into homes in this area, all legal and above board - but I need to accommodate more people and so I need a 'proper shop' as neither my home or my pop up are big enough. If I do not have the shop then there are two places my customers can visit me, my 'pop up' or 'home shop'.

However, no, I admit know nothing about renting a shop from the council, or contracts, as I have not had to do this before so I needed some advice.

As for the comment about them not changing the uniform, you are incorrect. It is not a change, it is an addition. Hard to believe - yes, both for you, and for me as I have a great opportunity here and not one I expected.

I am the only person stocking these items in this area, certainly within a 30 mile radius. I can also oppose any new retailers coming into this area and selling these products, that company will not get an account and the supplier is the only place to get these products - I know I can do this because the same thing has happened in the next town when a shop opened and wanted to stock the brand and they were not allowed because it was too close to other existing established businesses.

The 'pop up' and face to face sales aside, the online side of my business - running since 2002 and selling the same products as above - can support the costs of running a shop and I am personally in a place where I can do this around my children. I need no other stock to support running a shop, it will just mean, if no-one visits the shop, I will not be making any money. And this will mean we will have to forfeit our big overseas holiday for a few years.

So, your concerns are completely unfounded and I am not some fly by night company that will be 'here today, gone tomorrow', I have been working my butt off to build my reputation locally in the hope that one day I will have a shop and the clients to make that shop a success - however, that time has come much sooner than I thought and via a different means and it is a viable opportunity.

So please do not assume that. from one post, you know everything about my business as you have no idea.

I am waiting for a solicitor to call me back but there is no urgency from my side until I hear from the council anyway. I will not take it in the condition it is, it depends on how badly they want the area cleaned up really. It's Christmas next week, nothing much is happening before then.

Mattygroves2

mrs_sparrow wrote: »

Just to add, when we went to see if the man did say that it was going to be made to the same standard as the first one we had seen - which was immaculate. We are happy to do all the decorating ourselves but not the electrics, not the glass (which could run into thousands before we start), not the hole in the ceiling.

I thought I needed to have a survey done...... only because when I initially asked about another unit he told me that it was under offer and their surveyor was currently looking at it. This is why i thought I needed one.

It's likely you will be on a full repairing and insuring lease so expect to have to pay for any repairs once you've taken the shop over. Be prepared for the rent to be higher for a refurbished unit so you may want to weigh up the cost of getting the repairs done yourself against the extra rent.

Surveyors often do the negotiation on commercial leases which may be why one was looking round one of the other units rather than them doing a survey. You need to check what your repair obligations will be and if you'd be responsible for the roof then you might want someone to give you an idea of what condition it is in but surveys don't work in the same way for commercial property.

Be careful about the length of lease you sign and when the break clauses are. Think about what you'll do if the school stuff doesn't come off or only lasts a while. Given that I've just ordered my nephew's uniform for a school 200 miles away through Tesco I wouldn't rely on the school work being there for ever. Can you expand or diversify your existing work to be more geared towards selling through a shop ?

Have you thought about doing the school stuff through the school rather than having people visit you in a shop ? I work for a company that do all the uniform for one primary school and they have a contact at the school who deals with the orders, collects the money and the stuff is made and delivered to the school on specific days for distribution. Stops a steady stream of parents arriving at the factory where the uniform is created although it doesn't stop the phone calls ! The margin is reasonable though so there is money to be made but it can be hard work.

mrs_sparrow

Thank you for the reply, this information is really very helpful, thank you and helps me understand things a bit better.

The break clauses are at 1 2 and 3 years with 6 month penalty and the lease is for 4 years. To be honest, this seems reasonable for me as a start up shop who does not know what the future holds as it does not feel I am tied in for a huge amount of time to get started.

The shop has flats on top of it - they are owned by the same council and I've already asked them about potential issues because the ceiling of one shop had had an obvious leak. They tell me they are responsible for anything that goes wrong within the flat above - for example the shop on the other side had a leak from an overhead walkway and that was fixed for them. I do understand I need to be insured for the goods inside the shop. So there is no roof, the back and front are fully secured with electric shutters and big metal high gates into the yard. Buildings insurance is 50/50 myself and the council. It is monitored by CCTV and there is very little trouble there. I have asked various people.

I'd rather not do the custom through the school as the kids parents will bring other trade into the shop, my items are not just aimed at kids - I will not just be selling to the parents too. I will come back and update with what it is but, for now, I'd rather not.

Can it work? Yes, I think it can. Even without the schools on board it would work because the items I am offering are much needed, being independent means I can also offer more a better service if ever a big department store did come here. I also have the online side of the business to prop it up ifno-one comes to buy anything ever, which will not happen as there is nothing else selling these products around here. Furthermore, once I am in no-one will be able to sell the same brands as the company will not let them. People will - and do - come back as I am good at what I do and they go off and tell others. As it is I am not in a very prominent position and I have held off advertising for now as I want to move somewhere else. All my custom is word of mouth and it has been enough to pay the rent here with no footfall.

Thanks again for information you have given me, it really was most useful.

paddyrg

Sounds promising! Just a thought - if the schools drive a large slice of the business, then you might find the ordering cycle very uneven across the year with a rush on the last few days of August and deathly silence at other times.

Advertising through the schools (can you sponsor the backs of report cards, or something that will actually get to all the parents!) might let you use sales/price incentives to level out the demand so you can effectively increase capacity for very little cost.

mrs_sparrow

paddyrg wrote: »

Sounds promising! Just a thought - if the schools drive a large slice of the business, then you might find the ordering cycle very uneven across the year with a rush on the last few days of August and deathly silence at other times.

Advertising through the schools (can you sponsor the backs of report cards, or something that will actually get to all the parents!) might let you use sales/price incentives to level out the demand so you can effectively increase capacity for very little cost.

This is great idea, thank you so much for sharing.

There is another company at the school that does additional tuition and they have a stand at every event or coffee morning I go to so this is worth thinking about too.