Landlord wanting two months rent as deposit

[macfanuk]

We are looking to move into an office above a shop and we are sure we've found an ideal place. The place we've found is right on the corner of a busy junction in town and is in a prime area for redevelopment (there's soon to be a new supermarket built directly opposite so will draw plenty of passing trade).

We went to look around these offices today and have been in negotiations since. We have so far managed to negotiate 8.5% off the monthly rent but are still pushing for a little more, however, the agent has now told us that the landlord wants two months rent as security deposit plus one months rent upfront (which we have asked whether is negotiable).

My first question is, would you pay two months rent as security deposit, especially when every other office premises we've seen only asks for one month?

Secondly, is there any protection for deposits in business premises (similar to that of private renting)?

Thanks in advance for any advice you can offer.

 

[Richie N]

Depends, some ask for a quarters rent as security deposit plus a quarters rent.
Still try and negotiate, you are in probably a strong position at the moment.

 

[Consistency]

There is no limit really on what a landlord can charge to the best of my knowledge but i am happy to be proven wrong. A friend of mine wanted to move in to a house and the request was 6 months rent in full before they moved in. This would have been a few thousand pounds and would have had to pay the first months rent as well as this as normal on moving in and continue paying the rent monthly.

It was an impossible amount at the time.

A landlord can charge £5,000 a week if he wants to I think, but I do not think many will pay that because it is unrealistic depending on the property.

A lot of landlords are still paying a mortgage on the property that they rent out.

 

[macfanuk]

There is no limit really on what a landlord can charge to the best of my knowledge but i am happy to be proven wrong. A friend of mine wanted to move in to a house and the request was 6 months rent in full before they moved in. This would have been a few thousand pounds and would have had to pay the first months rent as well as this as normal on moving in and continue paying the rent monthly.

It was an impossible amount at the time.

A landlord can charge £5,000 a week if he wants to I think, but I do not think many will pay that because it is unrealistic depending on the property.

A lot of landlords are still paying a mortgage on the property that they rent out.

I agree with what you're saying and in my last house, I had to pay 6 months rent up front plus 1 months rent as deposit (equalled just over £3000).

So, if the landlord of these offices was asking for 2 months rent upfront and 1 months rent as deposit, that'd be fine, however, he wants 2 months rent as deposit (for a £75pw office), which I just think is unreasonable considering all other business premises in the area only require 1 month.

It's just a bit of a pain because it equates to an extra £325 which we could potentially use to furnish the office.

 

[Consistency]

A lot of what goes on in private tenancies is quite unfair. I rented in private tenancy and I was a very private person, there were loads of repairs needed doing and I just wanted to be left alone. It was like an arrangement, I got all the repairs done, well mostly, the rent was not too high and he just left me to get on with my life.

The previous tenancy was a very proud landlady and boy was she a landlady - my house, I want an inspection monthly, my house, she was a pain. Would not leave me alone. There are bad landlords and good and like everywhere just plain ridiculous

A lot of landlords may not look at local areas and go by what similar ones charge, they will just charge what they want.

All I can say is good luck in finding somewhere suitable.

 

[macfanuk]

A lot of what goes on in private tenancies is quite unfair. I rented in private tenancy and I was a very private person, there were loads of repairs needed doing and I just wanted to be left alone. It was like an arrangement, I got all the repairs done, well mostly, the rent was not too high and he just left me to get on with my life.

The previous tenancy was a very proud landlady and boy was she a landlady - my house, I want an inspection monthly, my house, she was a pain. Would not leave me alone. There are bad landlords and good and like everywhere just plain ridiculous

A lot of landlords may not look at local areas and go by what similar ones charge, they will just charge what they want.

All I can say is good luck in finding somewhere suitable.

Yeah, I know what you mean.

If anyone has any info regarding my questions though, that'd be really helpful

 

[Consistency]

1. Yes, I would pay it if I could afford it and I really wanted to be there
2. Best to speak to someone for proper legal advice. If you are members of the FSB, they have a free legal advice helpline where they may be able to advise.

 

[JohnnyCash]

I agree with what you're saying and in my last house, I had to pay 6 months rent up front plus 1 months rent as deposit (equalled just over £3000).

So, if the landlord of these offices was asking for 2 months rent upfront and 1 months rent as deposit, that'd be fine, however, he wants 2 months rent as deposit (for a £75pw office), which I just think is unreasonable considering all other business premises in the area only require 1 month.

It's just a bit of a pain because it equates to an extra £325 which we could potentially use to furnish the office.

Well if all the other places are asking for 1 month, move into one of them instead then. Or if the one you've found is so much better than those, then you're comparing apples to oranges. If he's got something better, he's asking for more because he knows someone will pay it...

With your furnish the office comment it sounds like you really can't afford this move though.

 

[LicensedToTrade]

And how many months have you asked the landlord to give you for free? In the current market conditions the power is very much in the hands of the potential renter, even if your landlord would have you believe otherwise, an empty property will be costing him a fortune.

Depending on the length of the lease you should be negotiation how many months he is going to give you rent free. If it were me I would propose that he gives you 6 months free and then be prepared for him to negotiate you down to 3 months.

I don't know anyone who hasn't managed to get a few free months in the last two years of startups.

 

[Cobby]

It can be awkward to put that kind of money forward but it's entirely down to you to negotiate, nobody here can tell you what that landlord will or will not accept. Just make sure you have a properly put together lease that you agree with and get it checked over by your solicitor.

 

[arcon5]

The whole point of a deposit is to instill confidence and protect the landlord.

If you have some long-term sales figures or an exceptional credit rating then this may help your case.
But tbh I don't think two months is unreasonable in the slightest. Your negotiation should be regarding the weekly/monthly rent you pay, the inital free period and general terms.

 

[JohnnyCash]

The whole point of a deposit is to instill confidence and protect the landlord.

If you have some long-term sales figures or an exceptional credit rating then this may help your case.

...and if you had those you'd cost yourself more than the £350 you're arguing over (unless you value your time at nothing).

It doesn't sound unreasonable at all to me, i'd just pay it. But the fact you're even trying to not pay it and saying you could use that money for furniture, really makes me think this is a move you simply can't afford in the first place.

 

[JamieM]

We paid 2 months rent for our deposit. I think it's reasonable.

 

[british steve]

Ask for a rent free period equal to the deposit. There are hundreds of small empty offices around, tell him you will pay two months deposit and in return you want two months’ rent free. It’s a buyers market at the moment so tell him if he does not agree you will go elsewhere! I have been looking at offices over the last couple of months for a new business we are launching and we have been offered up to 10 months rent free. Remember if the office remains empty the landlord is still liable for the rates which could be costing him several thousand of pounds per month

 

[deniser]

Two months' rent is very reasonable. We had to pay a year's rent as a deposit for out first shop and that was non negotiable. The reason was that it was in an area with a high number of business failures and high turnover of tenants so the landlord needed to protect himself.

You should ask that the deposit is documented in a rent deposit deed.

This sets out various provisions relating to your deposit. It will include who gets the interest on the money, provisions for the transfer or repayment of the deposit in the event that the landlord's interest in the property changes hands and how the money is to be held eg. on trust, at a solicitor's as stakeholder etc.

This document should be negotiated by your solicitor at the same time as the lease BUT we are talking very very small sums here so the cost of legal advice may well outweigh the amount of money actually deposited.

 

[Edd_Smith]

Personally i paid a 1/4's rent up front. If you like the property then pay up and move in

 

[thetime22]

Can't control the motion of the ocean.

 

[JohnKulasek]

Rent deposits are used by landlords to protect them from tenants without a track record who might just skip without paying the rent. It should always be in a document which is linked to the lease and scrutinised by your solicitor.

Hope this Helps

John Kulasek MRICS

 

[AdamJ]

The place we've found is right on the corner of a busy junction in town and is in a prime area for redevelopment (there's soon to be a new supermarket built directly opposite so will draw plenty of passing trade).

You've answered your own question. If its that good a property then don't believe the sweeping generalisations about it being "a buyer's market" - there are only a small number of truly good properties and they can always command higher rents or better terms for the landlord than other less well-positioned sites. It may be a buyers market for the less favourable properties, but not for the good ones.

One probably uselless thought though - you say a supermarket will mean more passing trade. Are you sure that people going to and from a supermarket won't be doing exactly that - passing?

 

[Lee Jones Jnr]

I don't really see why this is a problem?
1/4 deposit and 1/4 in advance is probably the most common arrangement so 2 months and monthly rental seems fine to me.

 

[papverpoppies]

I don't really see why this is a problem?
1/4 deposit and 1/4 in advance is probably the most common arrangement so 2 months and monthly rental seems fine to me.

If you concerned about 2 months rental, (which is not excessive) do you have the funds behind you, until your business starts to bring in revenue.


Poppy xx

 

[Deleted member 59730]

I have never heard of deposits on business premises. I've always got rent free periods for 'redecoration'.

 

[Lee Jones Jnr]

I have never heard of deposits on business premises. I've always got rent free periods for 'redecoration'.

Lots of smaller premesis ask for deposits.
Retail sites often give rent free periods to accommodate fit out etc but less so office space, though always worth trying for of course.

 

[amanda1112]

A landlord is perfectly within his right to charge whatever he wants to for his premises. Its up to the tenant if they decide to pay it. If you dont like it then don't lease it and find somewhere else instead! It sounds to me like you want everything for nothing. Next you will be complaining about silly little repairs that need to be done before moving in and deducting it from the rent at the end because you think it should have been repaired. What you see is what you get usually. Most landlords can see a trouble maker coming so if you keep on to him he will just rent it to someone else who has the money.

 

[Lee Jones Jnr]

A landlord is perfectly within his right to charge whatever he wants to for his premises. Its up to the tenant if they decide to pay it. If you dont like it then don't lease it and find somewhere else instead! It sounds to me like you want everything for nothing. Next you will be complaining about silly little repairs that need to be done before moving in and deducting it from the rent at the end because you think it should have been repaired. What you see is what you get usually. Most landlords can see a trouble maker coming so if you keep on to him he will just rent it to someone else who has the money.

You sound like a swell landlord.

A tenant can ask for repairs to be done, that is perfectly reasonable, the landlord also has the option to say no.

As a tenant always be sure to get photographic and written documentation of building condition as no matter what the state when you move in, the landlord or agent will claim that the building was pristine when it was let.