Renting space for your enterprise can push your company to new heights and help you make it big, but only if you do your due diligence. In this blog post, we’ll look at eight key considerations when renting an office or shop.
1. Getting a Lease
Getting a lease agreement for a commercial property in the UK is easier than you might think. In fact, you can simply get an online template that already has fair terms baked in. This could be a short-term or monthly contract, or a longer-term arrangement lasting several years.
In all likelihood, the property owner will provide their own commercial lease. However, you must compare it with an online template to ensure it’s fair. Only sign a lease that covers the following:
- The relevant parties (including guarantors)
- A full description of the property
- The lease duration and rent amounts
- Details on how you’ll use the property
- A break clause for early terminations
- The security deposit’s conditions
- Who is responsible for maintenance
- The insurance that either party should have
2. Location
Location should be at the forefront of your mind, even if you don’t serve customers. Search for a place that’s easy to access for everybody. Ideally, it’ll be near transport links, so your team won’t have a rough commute.
If you’ll be selling goods, consider footfall. You’ll need regular shoppers to stay in business, after all. The more popular a spot is, the more expensive your rental will be. You must find a balance between popularity and price.
3. Payment Terms
Confirm the rent amount before signing anything. The contract (or owner) might state how often you can review the rent. As rates are nearly always rising, try to negotiate at least 3 years at the current rate — anything more might be a hard sell.
You should also consider service charges for multi-occupancy or multi-business buildings, such as cleaning fees. In addition, you’ll have to pay business rates to your council, though there are relief schemes for small businesses.
4. The Property’s Condition
You must see the potential properties for yourself before choosing one. A place in poor condition might have a cheaper rate, but you’ll have a lot more work to do. At this stage, you should also think about the alterations you’ll need to make to fit it into your business.
Most commercial properties operate under a Full Repairing and Insuring lease, meaning you’re responsible for all maintenance. If you don’t know the property’s state before you start leasing it, you’ll have to fix any pre-existing damages yourself.
5. Surveying the Property
However, a cursory check might not be enough. You should also ask a surveyor to look over the whole property. A Chartered Building Surveyor can highlight both obvious structural issues and hidden defects. For example, the property might have asbestos without the owner knowing.
Having a professional by your side gives you more backing throughout negotiations. You could, for example, use any uncovered issues to ask for lower rent rates or get the owner to fix them.
6. Business Alterations
A property is rarely going to be fit for your specific needs right away. Even an office space might need some changes, though you’ll likely need the owner’s permission. Your lease should clarify your rights here, even if you must restore everything once the contract’s over.
Common types of alterations include:
- Adding partitions to divide offices and rooms
- Extra sockets to accommodate more devices
- Interior branding and exterior signs
- Disabled access, such as adding ramps
- Soundproofing for studios and meeting rooms
- Grease traps for food service establishments
7. Legal Compliance
You should also ensure that the building is fit for business use. For most shops and offices, this means it should be a Class E property. Some commercial properties, such as pubs, takeaways, and nightclubs, are exempt due to being especially unique or “sui generis.”
You must also look into additional permits you might need, including an alcohol licence or a food hygiene certificate. Operating without the right permissions could shut you down right away.
8. Exit Strategy
Most companies don’t sign a commercial lease intending to stay there forever. For example, you might grow suddenly and need a bigger space for your team. However, leaving a lease before it runs out is much easier said than done, especially for a commercial property.
For example, your lease may have a dilapidations clause, meaning you must leave the property in a “good state of repair”. This is obviously fair enough, but some landlords use this to force the tenant to undo any significant property alterations before leaving.
Final Thoughts
Renting a commercial space means checking the property and contract thoroughly to avoid any nasty surprises, especially when it’s time to leave. If you use an online template, however, you’ll know exactly what your lease needs and what’s fair to you.
