Commercial Property for Rent
So you have made the step of searching for commercial property for rent. Choosing to invest in your first commercial property for rent or additional premises is a major decision, as getting the right commercial property or wrong one can have a massive impact on the future viability of your business.
What to do before making an offer on commercial property for rent
There are many websites dedicated to helping you find the right commercial property for rent and some of popular sites are listed below. Many would be tenants would be best advised to familiarise themselves with the basics of a commercial lease and the meaning of some of the typical legal jargon before the solicitors have been instructed!
Why Understand Commercial Leases?
When a commercial property for rent is agreed with a commercial letting agent, ‘Heads of Terms’ (‘HoT’s) or ‘Memorandum of letting’ is produced setting out the basic terms of the commercial lease. This document will aim to set out the significant negotiated terms of the letting with the respective parties solicitors details included.
Heads of Terms agreed !
The HoT’s once agreed are then circulated to the relevant parties, including a landlord, tenant and the respective solicitors. Once a tenant’s solicitor receives the HoT’s, it is often too late to renegotiate any significant terms of the letting, such as for example asking for a tenant break clause, rent free periods or lease renewal rights.
A tenant who has some basic understanding of a commercial lease terms would be better armed to negotiate a lease with commercial estate agent (or direct with a Landlord) before the HoT’s is circulated.
Commercial Lease agreements
This section aims to give you a basic understanding of the terms of a commercial lease so that you can strategically negotiate with a commercial letting agent once you have found the right property.
The commercial lease
A commercial property for rent is often governed by a commercial lease agreement (the ‘Commercial Lease’). This is essentially a legally binding contract made between the Landlord and a Tenant.
The Commercial Lease gives you the legal right to use the premises for your business or commercial activity for a fixed period of time and in return you will pay rent to the landlord usually set out on an annual basis (for example £10,000 per annum exclusive of Vat ).
The Commercial Lease will also set out various rights and obligations, and often lease documents can run into 50-60 pages, with aim of regulating most eventualities and therefore removing uncertainty.
The difference between a commercial property lease and a residential assured shorthold tenancy?
Although both agreements are contracts where rights over real estate are exchanged for money (rent) there are major differences which if you do fail to grasp early on could be very costly.
A Commercial Lease is by its very nature a commercial or business agreement and consequently offers less regulatory protection than tenants in residential properties who may be occupying a flat as their home.
What are the main provisions covered with a commercial lease?
The type of property being let (e.g. warehouse, office, retail & hotel)
The address of the commercial property for rent
The length of the tenancy, and whether it is a fixed term or a term that can be renewed periodically
The amount of rent charged, and when the rent will be paid. What provisions are there for a security deposit?
Whether there will be a rent free period
Which types of business can be carried out in the property, often referred to as the ‘Permitted Use’.
What are the repair obligations, is it FRI leases. A FRI lease stands for a Full Repairing and Insuring lease and effectively means that all costs of maintenance, repair and insurance on the property must be met by the tenant. Kerseys Solicitors LLP has experience in successfully putting forward strategies to the Landlord to minimise the tenant’s liability.
Whether subletting or assignment is permissible (selling the lease or subletting)
What notice provisions are offered for termination of the tenancy, is there a tenant break option?
Is a guarantor or a surety required? This usually is a person who agrees to pay any losses directly to the landlord if you become unable to pay the rent or breach the tenancy agreement in another way. Often where a lease is being granted to an incorporated limited company a landlord will want to make sure that a director of the tenant company stands as a guarantor. Kerseys solicitors have experience in putting forward strategies to Landlords to minimise personal liability in such cases.
Commercial property near me ?
Many newbies to business often ask ‘where can I find commercial property near me’. Whether it is commercial property in London, commercial property in Manchester, Leicester or Nottingham popular property listing websites such as those listed below is usually the starting point. Local commercial letting agents may be able to suggest commercial property for rent that is likely to be available in the near future.
Kerseys Solicitors LLP -expert commercial property solicitors
Kerseys solicitor LLP have an experienced team of property solicitors who can advise and represent tenants (or landlords) nationwide and are happy to provide an early consultation on strategic terms that you may wish to negotiate with a letting agent based on your particular business circumstances be it break clauses, taking the lease in a corporate entity, limiting repair obligations and paying less stamp duty land tax.