Renting business premises: 4 questions to ask before signing a lease
If you are looking to rent a commercial property for your business, there are a number of factors that you should consider before signing a lease. It is advisable to take expert advice to ensure you are getting the best deal, particularly if you are looking for a long-term lease.
1. Length of the lease
Leases for commercial property rental are different to those of residential rentals. They can range in length, anything between one and fifteen years is not uncommon. If you go for a longer-term lease, you should make sure that there is a break clause – usually after the first five years – to protect you in case the situation of your business should change. You should always try to negotiate your break clause; if you would like a get-out clause of fewer than five years, you may be able to work this into the lease.
2.Getting the right price
Most people are not as familiar with the rental prices of commercial property as they are with residential property, so you should do your homework thoroughly before making an offer. Look up local property rental and purchase prices in your area, so that you are in the best position to negotiate once you have found one you want to go for. For longer commercial rents, most landlords will ask that you put down three months’ rent upfront – this is normal practice, but you should ask if you can pay the rent monthly going forward.
Another thing to check is whether your rent is liable for VAT and if this is refundable. This can make a big difference to your overall cost, so make sure you are clear about VAT rules before you make an offer on a property. As with residential properties, the price that is advertised may not need to be the price you pay. Research commercial rental demand in your area. If demand is low, you may have more freedom to negotiate a lower price.
3. Additional charges
When you rent a commercial property, there are a number of extra charges that you should expect to pay, including the cost of yearly insurance for the building and its contents, property taxes for leases and possibly upfront charges for utilities like electricity and water. Many serviced properties also have service or maintenance charges that you will be expected to pay, which cover upkeep such as cleaning, repairs and gardening.
4.Inspecting the property
You should also thoroughly inspect the property before signing the lease, as you may be able to negotiate repairs or upgrades as a condition of your lease. It is advisable to hire a surveyor to inspect the property before proceeding with its rental, as they will be able to tell you whether the property matches up to the proposed price.
Seeking legal advice
When negotiating the terms of your lease, it may be beneficial to seek advice from a legal consultancy that has particular experience in dealing with commercial rentals. As your contact will be legally binding once you have signed it, it is important that you understand everything that is in it. As a landlord or a tenant, you will need a solicitor to review the contract before it is signed, in order to protect your interests. If there is anything in your contract that you are unsure of, your solicitor will also be able to negotiate changes on your behalf.
Here at Integra Solicitors, we are experts in working within the commercial property sector. We can advise you on the complexities of arranging a commercial lease to ensure that you secure the best terms and to protect your interests. Give us a call today to get your case started.