General help with premises

[Dea Glass]

Hello all, I hope you can help clarify a few concerns I have regarding premises I am looking at leasing for my business.

I have found some premises locally that seem to fit the bill. They were not advertised through an agent, and I stumbled across them as they are near where I live. I have met the landlord and we have loosely agreed terms, verbally only. Non repairing lease, with a two year break clause. I have engaged a solicitor but have not got to the actual point of seeing and reading the lease yet.

What I intend to do with the premises falls within A1 and D2 usage. The landlord is telling me that the premises are A1. I have contacted the council planning dept to confirm this and they have informed me that the premises are not A1, but B1 and I that may need change of use to run my business. I have been informed by the council that I can use a pre-paid planning advisory service to find out if they would grant permission for this.

I don't really have a problem with the fee, it is a small price to pay for peace of mind. Slightly confused by this I asked the landlord to clarify (again) by email the class of use. He came back and told me that the class of use was A1 and that the local planning officer had told him this, but that I should confirm to see what classification I need to run my business.

He has now emailed me (24hrs later) and asked me to confirm if I am still interested in leasing the property under A1 usage, as he does not want to incur unnecessary legal fees.

I am not really sure how to handle this? I clearly want to lease the premises, but in reality I will want to apply for D1 usage as well as A1, which as the lease currently stands - the property has neither....

Next door has recently been let ( same landlord) and has had signage put up, the landlord expressed to me that he would prefer not to apply to the council planning for signage as it was too complicated, and that I should just let him know what I want and providing it was tasteful he would approve it.

The premies next door have just been let as a retail outlet too, but have the same classification, B1

In reality, I could run my business under A1 classification, but an additional D2 would give me better options. But not under B1.

Also, this landlord has another business interest, next door, he has informed me that he has put up signage without permission, too much hassle from the council. He became quite prickly with me when I questioned him about business rates, as he wants to proportionally assigned rates for the space I am leasing. When I told him that I would qualify for business rates relief, he told me that I could of course ask the council as it was my right, but it was probably better to leave it as it is as they could go up and I could end up paying more.

Any advise would be greatly appreciated.

Many thanks

Dea

 

[kulture]

Walk quickly away from this landlord. find another property. Already red flags are arising, so go by your instincts.

 

[JamesSco]

Sounds very strange - I'd walk away.

 

[Stuart Bailey]

speak to the solicitor you have instructed.

 

[BusinessDeli]

He's lying to you and isn't going to do things correctly and legally as it's too much effort? Walk away or it WILL bite you later.

 

[Tony King]

I can only agree with the other comments - walk away and get a reputable letting agency.

 

[Dea Glass]

Thanks very much for your advice. My instinct is to walk away from this too.

 

[Tony King]

very wise

 

[peggyprice]

Instinct is one of the most important things a successful business person has. Listen to it and walk away

 

[Talay]

First thoughts are to run, not walk but on reflection, I'm not sure it should be so easily cast aside.

If the following hold up: cheap rent, Ltd and no personal guarantee, non insuring / repairing etc. then it might be worth the quite obvious risk to someone setting out in business if no large F&F were involved.

 

[mhall]

Yes, you have a dodgy landlord, but it's not all doom and gloom.

www.VOA.gov.uk will tell you if the unit has its own Business Rates. If it has, and I suspect it has as it appears to have its own planning code (and the website will tell you what it has been assessed as), you changing the planning permission will increase the rates so the Landlord is telling the truth.

If it is currently B1 (offices) then changing to A1 (Retail ) will bump up the rates big time. I would guess the landlord is thinking if he stays quiet no-one will notice and cheaper rates will be paid. Naughty yes, but totally understandable given the current rates debacle

He does sound dodgy but only in that he is trying to get round the ridiculous Business Rates and Planning departments of the local council, and I think most of us would have sympathy for him there. We spent years trying to get planning permission for a sign, only to have it rejected six times for different reasons because of staff changes. Finally I snapped and we just put the sign up anyway without permission. Four years on and we have not heard a dicky bird.

As long as you know where you stand, and everything else stacks up. I would gently stroll away and see if the landlord follows. Sometimes you need to work with what you have.

 

[Dea Glass]

Thanks for all the replies - very useful. Believe it or not, I am still negotiating with this landlord.

He was quite surprised when I told him that the premises were not A1, and that I had this in writing from the council. He asked me if I could forward the details confirming the class of use that I had received from the planning dept. He has told me that this dept has made a mistake and that this relates to planning permission that he applied for several years ago when he wanted to turn the premises into a block of flats. Permission was refused, so he decided to use the building as office space instead.He was going to apply for B1 usage, but at that time he just moved his business into the building and thought he would apply once he was settled in. He didn't ever get around to doing it. He thinks the confusion over class of use relates to the application/enquiry for change of class of use a few years ago. He has told me that if I want to take the shop, and he says it is A1,I should consider it. He has offered to change the class of use and pick up the expenses if in the future someone queries it. He has also said he would write into the lease that if the class of use permission is not granted, it would make the lease null and void releasing me from any financial liability.

With this in mind I am considering it. Clearly my solicitor would need to see the lease before I sign anything.

He did say that dealing with the council was a nightmare, and I tend to agree. They have had a planning application from me since Feb and they called me last week to tell me they had made a mistake and that I was going to have to submit another application. Interestingly enough it was the same person who told me that the lease on the shop premises were B1 and not A1.......


So with the above in mind I am still in the running with it.

I do have another question though.....

The landlord has now told me that he has a problem with me trading as a Sole Trader.

He says that it is more risky for him to lease the premises to me as a Sole Trader, than if I were a LTD or LLP company.

He has told me that he could do Credit References ( without my knowledge), but he probably has insufficient information about me to do that.

He is asking me for authenticated credit references or for me to provide a guarantor.

I am assuming he wants a bank reference ? He says that once he has these references he will decide if I can or can't afford the rent, or in his words -
'I do need to satisfy myself that my rental income is secure'.

Could someone please give me an idea of acceptable credit references that I may send to him. I am very wary of handing over financial information to anyone willy nilly. I have nothing to hide mind you, I am financially very secure but don't want to give my private financial details away unnecessarily.

Many thanks for your help so far.

Dea

 

[JamesSco]

I would say its more risky renting to a Ltd company than a sole trader. If a limited company goes bust without any personal guarantee then the landlord cant chase anyone for the money. On the other hand, if a sole trader goes bust and defaults on the lease the landlord can chase personal assets of the person whom signed the lease.

For credit references, he may be asking for a company you work with to provide a reference. We on occasion get asked for details of other companies we work with so they can confirm we are financially stable.

I would however, avoid getting anyone else to act as a guarantor.

 

[kelvin1950]

The landlord won't rent to you as a sole trader but will do so if you're a LTD but you must give him a guarantee?

Ummm, it may be me but that sure looks like the same thing.

 

[Dea Glass]

I have now determined what the landlord is asking me for. He wants me to provide either a Credit reference that he can authenticate himself or...


Full name, husbands full name.
Date of birth
Address, previous address if at current address less than 3 years.
Do you own your own property? If so market value and outstanding mortgage please.
Do you have any other credit; credit cards, store cards, loans etc?
What was your turnover and profit after tax for the previous year?
What do you expect your annual turnover to be for 2014/15, what do you estimate will be your profit after tax for that period?


Does the latter sound a bit over the top? I could quite easily give him this information, but it does seem to be a bit intrusive.

I would like to give him a credit reference and have told him this, but just in case he refuses this I wanted to get some advice on whether this is reasonable or not.

Thanks for your help so far. I am feeling a bit out of my depth here.

 

[800heerww]

Walk away immediately. Wow.

 

[ragtime27]

Don't walk away........,work with the landlord but make sure everything goes through your solicitor.

if you were the landlord you want to make sure that you leasing the premises to someone can afford it and not wasting your time or not paying rent...etc.

use the lack of A1 to your favour .

 

[Dea Glass]

Thanks Ragtime27.

I have given the landlord a credit reference - through Experian.

Things are surprisingly quiet....... am awaiting his response.

 

[Dea Glass]

I have just heard back from the landlord. He has informed me that my credit reference and score are more than satisfactory. But now he want's MORE assurance that I am going to be able to pay the rent going forward. He has asked me for this ' I would like to know about your business plan and numbers numbers which I hope will illustrate your ability to afford the rent'. What do you suggest I divulge to him? Is is normal practice to hand over your business plan to a landlord ? He is not my bank manager and I am not asking him for a loan. Yes - he is leasing me premises, but I have given him quite a lot of assurance already with the credit reference. I could afford the rent out of my savings without ever earning a penny, but that is none of his business! Are they all like this?!!!! I think I am going to tell him NO, I will not give you my business plan, take it or leave it with the info you have!

Thanks for you help so far.

Dea

 

[kelvin1950]

It's not unheard of.

 

[Dea Glass]

I have spoken to my solicitor regarding the latest request from this LL. He has taken a look at the email trail so far and has advised me not to go any further with this LL and property. I have to say, I feel relieved. Right property, wrong landlord. I am going to start looking for new premises again in a few weeks, but through an agent. I have learned a lot though this process, so it was a very valuable exercise.

Thank You for all your help over the last few weeks.


Dea

 

[Talay]

Is your solicitor commercial or just a bit of everything wills and probate type ?

I think this highlights the need to have all this done on a commercial basis from day one. No messing about with this and that, no credit checks, Ltd or nothing and a commercial solicitor in the frame to act as a buffer and not get scared off when not everything is 100% kosher.