The Practicalities of Renting Commercial Property
The Contract
Enlist the services of a solicitor, although it is an upfront cost, it will prove cheaper than a drawn-out legal wrangle further down the line.
You can find a solicitor in your area trough the Law Society's website.
Financial considerations
Your financial commitments when renting include:
- rental costs
- service charges
- utility bills
- a deposit - typically equivalent to three or six months' rent
- stamp duty, which is payable on all commercial leases
- business rates
Normally, the landlord will request references to confirm you are able to pay your rent. You may required to provide a guarantor for your rent and other liabilities under the lease.
Your chosen property may be in a Business Improvement District (BID), where businesses in an area can agree to pay an additional levy on their business rates to fund local improvements. If a majority of the business ratepayers in your area vote to fund a BID, you will have to pay the extra levy. However, you will also benefit from improvements to the local trading area.
Planning
Find out if there are any restrictions on delivery or loading times that may affect your business. There may be other restrictions or covenants in the lease or imposed by the local authority - eg rubbish disposal, parking, noise and lighting.
Planning permission may be required if you wish to make alterations to the property. Generally, it is not needed if you want to make minor alterations to the outside, such as fitting telephone connections. If you want to put up low walls or fences these fall under general planning permission and a specific application is unnecessary. .
Planning permission is generally required if you want to extend, convert or change the external nature of the premises. The majority of significant building work has to conform to building regulations. It is always a good idea to check with your local planning authority whether the development will require planning permission at the proposal stage
If you rent workspace in multi-tenant premises, liability for external repairs and maintaining common areas is likely to fall to the landlord, but you must check the terms of the lease to find out who is responsible.
The rental agreement should also outline whether there is any repair work pending. You may wish to consider commissioning a survey to ensure that any such work is finished before signing the rental agreement or face paying the bill.
Insurance
The lease will state whether you or the landlord need to arrange insurance for the premises. If the landlord arranges this, you may still need to take out additional insurance to cover risks, such as loss or damage to contents, which are not covered in the policy.
Property owners' liability insurance enables you to meet any costs and damages awarded to a member of the public if they suffer an injury following an accident on, or linked to, your premises.
Where you insure your contents and business, and a landlord insures the premises, you must ensure that property owners' liability is included in at least one of these policies.
In general, it is a good idea to check with your broker that property owners' liability is included in your business insurance or with your contents insurance.
Next: The responsibilities of commercial property tenants