Renting/Leasing Commercial Property
Whatever your needs and requirements, there is only one very important thing to remember: it is essential to obtain expert advice before taking any steps whatsoever.
The implications that can be relevant to a commercial property transaction can be truly incredible. These can be roughly translated into potential liability/expense.
It cannot be emphasised enough that intense research into the individual property under consideration is essential i.e. planning uses, restrictive covenants and fire/safety legislation structure. The list seems to be endless.
To try and make things simple, the matter should be broken down into sections. These sections are to be analysed by you personally and a chosen property professional.
Ok, seeking to buy? You will already have considered location, i.e. footfall, access, parking, security, approval of usage etc. Price is there or thereabouts; great. Next is finance. Nobody knows your finances better than you do, but do talk first of all to your accountant and work out accurately the affordability. He/she can help with loan arrangements and the terms of the loan. They can also probably negotiate lower set up fees and a better interest rate; best not to just rely on your own bank. Work out carefully the true outgoings regarding loan payment, business rates, management fees and factor in potential maintenance costs and insurances.
Still good to go? Ok, let’s get the ball rolling. Enter solicitors and surveyors. No easy route here, you simply must employ professionals to do the job that you cannot do. Certainly, the mortgage provider will require a valuation and will appoint, at your expense, a surveyor. Best to speak directly with the appointed surveyor and arrange for them to do a full survey in greater detail on your behalf. Their experience and expertise would possibly save you thousands should there be a fault with the building, its wiring, plumbing or air conditioning. You name it, best to let an independent specialist check it out. Finally, they can advise you on the value.
The solicitor is also there to protect your best interests and it is important that he/she understands exactly why you are buying the property. This is to ensure suitability of purpose. Is there a nasty covenant hidden somewhere that restricts your usage? Is the title clear? Is the seller really the seller? Are the fixtures and fittings that are included paid for? They will also carry out the work on behalf of the lender and the handling of the money transfers, straight through to completion.
By keeping in principle to the above advice, you should be the proud owner of a very suitable property that will serve you well for many years. But also, you will be able to take comfort in the knowledge that, if you wish, be able to sell it again without the likelihood of any major problems arising.
We can help you with buying, selling, renting, a lease assignment or a schedule of condition
Both landlords and tenants are essential to each other and in simple terms, the lease of a property should be suitable and acceptable to both parties.
Great! As long as there are no misunderstandings and all agreements are set out in no uncertain terms and understood by both the landlord and tenant.
Sounds simple! It is not simple. There is nothing simple about it. Leasing is more complicated than buying and both landlord and tenant must give very careful consideration to all the various areas relevant to the lease. For example, start date, incentives (if any), uses and non-uses, availability 7 days or Sunday restrictions for non-use (maybe no Saturday or Sunday usage with certain landlords with religious connections).
How long is the lease term? Should there be a break clause? What rent is agreed initially and will it be reviewed? When and on what basis is index linked? Open market rent? Deposit to pay? If so, how much and who will hold it? LTD company? Should there be personal guarantors? Should they be credit referenced?
I am sure that you are now getting the idea. However, we have not got to the real issues yet. Believe it or not, there are two real danger areas, with the big dangers being with the tenant. This basically hinges on lease termination i.e. getting out of the lease. The risk is in two areas:
1) The liability of the unexpected term.
2) The schedule of condition of the property.
Let us take item 1 first. Ok, you want the security of tenure to grow the business and the last thing you want is to have to leave. Think of the cost and distribution of an unwelcome relocation to your business. Perhaps best for a long lease then? Stop! What if the business struggles or, better still, expands beyond expectations and you need to relocate? Problem. You have a lease liability that the landlord is not going to release you from. So get legal advice of the best quality. To put this into context, Cardwells are involved in a lot of commercial property rentals, sales and negotiations. A recent example of the above is a tenant on a ten-year lease of a property and now in the 6th year. The rent being £14250 per annum. To exit the lease and hand back the property resulted in a payment of thirty-five thousand pounds, plus our client’s legal fees. Clearly, this is an area to be carefully considered. Remember, the landlord will offer better terms/rents based on two main factors i.e. quality/track record of a proven tenant and length of the lease. For example, a 21-year lease to Boots the Chemist is more valuable to a landlord than a 3-year lease as a start-up business.
Ok, on to the most important information within these pages; the schedule of the condition report. Ignore this at your peril. It is no joke and imperative that this matter receives your undisturbed attention. Ok, you are going to modify the property to suit your needs. The landlords say ok but, when you eventually leave, it will have to be reinstated to its original condition and you, the tenant, will be the one to pay for this. Now we are not talking about maintenance issues here i.e. leaking roof etc, which will be covered separately under lease terms and conditions, but quite literally putting the property back into its exact original condition.
To not instruct a qualified expert witness report to be carried out “prior” to signing the lease and moving in, is to leave yourself totally exposed to the expense of reinstating the property to the exacting requirements and costs of the landlord. A full documentary report backed up by photographs and video is absolutely essential. This should be carried out in every circumstance and attached as an appendix to the lease. Given a reasonable landlord and tenant, this report could be carried out as a joint expense, but in any event, it is the best money that a prospective tenant and landlord could spend, either jointly or individually.
Cardwells can, of course, undertake all work of this nature and are happy to assist all parties with survey and valuation work, rental valuation, reviews and, of course, schedules of condition reports as above.
Cardwells do not sell businesses but can provide superb commercial property sales and rental service. We offer a personal and confidential approach with a structured marketing programme designed to suit individual clients, their circumstances and their property with the required result achieved through modern technology, traditional values and, of course, hard work.
We have offices in Bolton, Bury and Whitefield, with our areas of selling covering much of Lancashire. We have property for sale around the North West, including Manchester. We will be more than happy to help you with any aspect of the home buying experience, whether it’s simply just a bit of advice, or you want to go through us as a commercial estate agents. Call one of our branches (we also cover Walkden, Worsley and Prestwich) or pay us a visit to see exactly what we can do for you.