Verbal Leasing agreement

Dodgysailor

Dear all,

I want to start a new training business and local rents are high. I found a local in an industrial state where the current tenant does not use half of the building and he is keen to sublet it to me. Even though he is not allowed to sublet, the landlord does not mind and we have come to a verbal arrangement on lease fees etc. I know them both.
I know the risks of having just a verbal agreement but other than that is this against the law in any way or form?
Many thanks

Sandtree

The legality of it you're best asking a lawyer about but many have these kinds of informal arrangements. 

Whilst protections in B2B arrangements are much less typically than in B2C in property leasing there are some protections though you can waive your rights to them... both sides need to consider the grey area you'll be in if there is nothing in writing. This could be particularly problematic for the current tenant if they have waived their rights but cannot evidence the fact you have

daveyjp

Always have sometning in writing where commercial property is concerned.

martindow

If the arrangement is suddenly stopped because the landlord or tenant changes their mind, would it be a lot of hassle to move out at short notice?

If you only have a small amount of stuff there and could move out readily it may be worth the risk if the rent is the bargain you suggest.

Dodgysailor

Thanks!!!!

bris

There is tax implications, if you are paying cash in hand then claiming it as an expense then you are going to need receipts. 

If the LL (who you sublet from) doesn't want a paper trails then it's tax evasion that you could end up being complicit with.

If you are going to have arrangement with lease fees etc then why isn't it written down? The arrangement can skip the main LL but don't forget that the main LL can at anytime hold the sub LL in breach of the lease if it explicitly stated no subletting and there is nothing in writing to say it can be sub let so there is that to think about if there is a falling out.

MalMonroe

You say "Even though he is not allowed to sublet, the landlord does not mind and we have come to a verbal arrangement on lease fees etc."

So you've answered your own question really. (And has the landlord REALLY said he does not mind? Has he said that to you for example??)

If you want to start your own business, do it properly, not with this kind of living on a knife edge proposition. And if it's your business, i.e. making your living, do you REALLY want to have no written, formal, legal agreement about where you're going to be running it?? Why risk ruining it all before you've even started?

There are better ways to start a business than the Kray Twins School of Business way.

Have a look at the information in here - https://www.gov.uk/set-up-business

If you can't afford to rent proper premises, maybe it's time to have a rethink. If it all goes wrong (which it currently appears to have great potential to do) your name will be mud and then it'll be impossible to start another business. 

martindow

I think it comes down to how the OP intends to use the rented space.  If it is merely to store stock or equipment then moving this to a storage unit at short notice would not be a problem.

If on the other hand the rented area is going to be used to receive clients or to hold events, losing the ability to use it could be much more serious.

Savvy_Sue

Whatever it's used for, arranging insurance might be problematic.