There’s little doubt that moving house is one of the most stressful experiences for a family. But arguably, the process is even more difficult when you are moving to leased business premises. By following these five easy steps you can make moving commercial property work in your favour.
Limit your exposure to Rent Deposits and Guarantees. Unless you have an established financial track record landlords frequently ask for a personal guarantee or a rent deposit – typically 6 months’ rent. This can leave you exposed to risk. In both cases, don’t just accept these terms as a given – landlords will want to get a deal done as much as you do and many will negotiate so you are in a much more favourable position. When advising a tenant I would always recommend rent deposits over guarantees.
Agree a sensible length. You are likely to be moving because the business is growing and therefore needs additional space. Whilst this is a great position to be in, you need to think carefully about the amount of space you are committing to and for how long. Don’t forget to leave a little room for growth; the last thing you want is to have to move again before the end of the agreed lease. Be savvy about break clauses too; whilst the lease may be for 5 years with a stated 3 year break, this is likely to be negotiable. If you don’t ask, you won’t get!
Cover all bases. In this day and age, we expect things such as phone and internet connectivity to come as a matter of course. However, this isn’t always the case. If possible, arrange for your own IT consultant/manager to visit the site and check that connectivity is sufficient for your business’ needs. If you are in engineering or manufacturing check that the electricity supply is sufficient for your needs.
Incentives. Landlords will be expecting you to ask for incentives whether it be a rent free period, direct financial contribution to fit out costs or carrying out works on your behalf – it’s a question of negotiation but if the property has been empty for a while the landlord is likely to be more amenable to these discussions.
Account for all costs. In the excitement of agreeing new premises, ‘hidden’ costs can easily be overlooked. Get a survey done – be clear as to what you are taking on. Another frequently forgotten cost is Stamp Duty – if the rent and term of your lease is over a specific level you will have to pay this. This is a cost which is often forgotten about but can be substantial. And don’t forget about VAT either!
For further information do not hesitate to contact Farleys’ specialist commercial property team on 0845 050 1958. Alternatively please complete an online enquiry form.