Commercial lease - rent between £400 - £650 - Andy advice, tips

[Vyzari]

Hi all,

I have been looking at small commercial properties in the West Midlands region where I am based. The size of the properties that I have looked at varies from about 300 Sqf to 750 Sqf. Most of the leases I have checked are 3 year 'fully repairing and insuring' leases. I have a very small Ltd business with not a lot of cash to burn unnecessarily. So could you guys give me your thoughts / advice ;

- Given the small size of the units and the low rents of between £400 and £650 per month, is it worth engaging a solicitor?
- If we do get the solicitors involved, would it be after a landlord's advance if paid or before?
- What would be the typical solicitor's fees for these sort of properties?
- If the deal doesn't go ahead, is there a risk I will lose my advance (and obviously solicitor fees!)
- in general, is there any advice on how to approach this as a first timer?

Please advise and thank you in advance!

 

[fisicx]

Go to a solicitor! Don’t even think about doing anything without talking to a solicitor. Don’t sign anything without seeing a solicitor.

 

[MBE2017]

To address your points, but not necessarily in the order given.

1- Go to a solicitor of your choice, acting on your behalf, looking after your interests.
2- Normally you will pay for both yours and the landlords legal fees.
3- What advance are you talking about?

The dangerous part of your whole post is a fully repairing three year lease. Ensure you understand what this could mean to you, once you do you will not have any problem paying for a solicitor. If you go ahead get a break clause inserted into the agreement.

 

[JJL]

I’ve had two leases as a Limited company. I didn’t engage solicitors in either. First was with the local council, 1000 sqft costing £500 per month, this cost me £800 for redecoration at end of lease after 3 years, around 10 years ago. Second was a 750sqft unit from a private landlord that was in very poor condition, I cleared it out, swept it clean and handed keys back, no issues. But this could be entirely different for you, so take advice from others.

 

[Mark T Jones]

Take a look through the forum posts around commercial lease problems - then decide whether you need legal advice.

It's entirely possible that goings will go swimmingly, and also possible that they won't.

If you go for legal advice, make sure your solicitor specialises in commercial property

 

[WaveJumper]

You roll the dice and take your chances as above you only have to read the many posts on here regarding this topic ......... so get legal advice, and make sure you fully document (including photo's) the condition of the unit before you even think of signing something

 

[Porky]

100% where a commercial lease is concerned use a solicitor have them check the document out. Can save you a whole world of pain. Ask for a quote I can’t imagine more than £750 for that?

I have also taken premises in previous coys without using a solicitor and have been lucky no issues. But knowing what I know now, if I was signing for one tomorrow I would use a solicitor every time.

Brilliant suggestion about adding a break clause. See if you can add it at say the end of year one, to cap your liability at 12 mths rent if you have issues at the unit

Understand what “fully repairing means” three examples I can give you from my history.

A 2400 sq ft unit I rented, had facia board along the top of the building under the roof. Looked ok from the ground up but was wood and rotten. Parts fell off after six months and I had to repair which resulted in me having to replace the facia at a cost of £2,700 - wasn’t covered by my Insurance.

In another unit, unknown to me behind my toilet system a cold water pipe was loose, over a weekend it leaked water which flooded into a near office floor soaking the carpet. I had to get it fixed and clean up the mess. Another cost to me, it wasn’t worth claiming on the insurance. That was about £700

An office radiator pipe had a leek and damaged the carpet in the surrounding area, we had to pay to replace the carpet and the radiator.

If you are personally at this unit you can obviously spot anything that might need maintaining yourself, if you are not you rely on someone else to tell you

Hopefully you will take on and not have any issues but be aware all the same.

Good luck

 

[IanSuth]

We had a leaking Valley on the roof, our lease only covered up to Eaves height but we had to pay for the ceiling replacement even though a consequence of the landlords poorly maintained roof.

We also had a window frame rot - went to replace and found it was listed and we had to stabilise it, leave in place with horrible secondary glazing fitted inside as that is what conservation office wanted (so building maintained outside look)

 

[Paddy @ Hatch]

To address your points, but not necessarily in the order given.

1- Go to a solicitor of your choice, acting on your behalf, looking after your interests.
2- Normally you will pay for both yours and the landlords legal fees.
3- What advance are you talking about?

The dangerous part of your whole post is a fully repairing three year lease. Ensure you understand what this could mean to you, once you do you will not have any problem paying for a solicitor. If you go ahead get a break clause inserted into the agreement.

Agree with 1. 2 is incorrect - it is not the norm, both parties should cover their own legal fees as is standard wording in Heads of Terms. 3 I agree I don't know what this means. And I agree the full repairing and insuring element is one to be wary but don't be put off. Ask for a photographic schedule of condition (essentially photographs recording the condition of the property) to be appended to the lease. This effectively limits your repairing liability.

Yes get solicitors involved. Make sure they specialise in commercial property. They should cost no more than £1,500 but it depends which legal documents you need. Smaller, regional firms tend to be cheaper as they don't have the large overheads. They will still charge you if the deal does not go ahead.

I don't know what you mean by an advance.

Agreed ask for an 18 month break clause as this limits your risk.

Make sure to check your business rates - remember you will be eligible for government rates relief and the property may fall under the rates threshold anyway.

 

[Vyzari]

Hi everyone,

Many thanks for taking the time to share your experiences and advice me on the best course of action. Since starting this topic, I found a council property - it seems that their terms are much better so I have decided to proceed with it. I don't intend to get the solicitors involved as I am only responsible for the internal repairs and maintenance. The buildings insurance is also included in the service charge, so this looks like a good deal.

 

[pentel]

I don't intend to get the solicitors involved

This could easily turn out to be a bad decision.

A review of the exact terms especially in relation to end of lease could pay dividends.

If the property has been newly decorated and new false ceilings then it may be that you would be required to leave it in the same state as when you took on the lease, namely replace the ceilings and repaint to the same standard as at the start of the lease.

 

[kulture]

At the very least read the lease in detail and make sure that it says what you have been told what it says. Never trust what the landlord’s agent is saying. If there is anything that you don’t understand fully, assume the worst interpretation. Better yet, take it to a solicitor and get them to explain it.

You would be foolish not to use a solicitor. Councils can be just as bad as any other landlord.

 

[Paddy @ Hatch]

Good advice @ kulture. Anything you don't understand - check. You also want it to be inside sections 24-28 of the 1954 LTA Act meaning you have the right to renew at lease expiry.