For most property professionals their business premises are important. Premises costs and business rates are also significant liabilities.
Property professionals will be looking for certainty around the cost of premises and flexibility on the length of the lease and sharing of the premises. All of these are matters you should set out in heads of terms and at Attwells we would recommend your lawyer reviewing the heads of terms to ensure that all the key commercial terms are covered.
On lease costs make sure you identify the following:
- Is the rent plus VAT?
- Do you have a service charge to pay? Is it fixed or capped?
- Are there any reviews of the rent? If so how often and are they to market rent or RPI?
- Have you negotiated a rent-free period?
Don’t forget the cost at the end of the term of accepting a lease if full repair and condition if it is not in good condition. You won’t see this cost now but when the lease comes to an end you could be served with a list of repairs that are considerable. Remember if the lease is of the whole premises then you could be liable for structural defects too and a building survey is a must.
Security for the lease
Think about your security for the lease too. Don’t personally guarantee the rent unless you have to. Keep your business and personal finances separate if possible. Offer a rent deposit instead.
On flexibility and sharing make sure you consider:
- Length of the term of the lease and any break clauses
- Do you have a right to renew at the end of the term?
- Can you share the premises with other companies such as a mortgage broker?
- Is the user clause of the lease wide enough to enable other businesses to trade from the premises?
- Can you sublet a floor or part of the office without the consent of the landlord?
How Attwells can help
Our Commercial Property Team acts for property professionals large and small and combines strong technical expertise with the commercial awareness of your sector and your needs. Whether you are on a program of expansion and need to negotiate the best terms or you’re looking at a strategy or options for exit make sure that Attwells are part of this conversation.
Many of our property professionals also hold investment property too and we can help you with the management, acquisition, and refinancing of this portfolio.