New business/lease advice please

[Tancho]

Hi, new here so please be gentle!

My wife has run a very successful Pre-School in a local community centre for the last 10 years. We now want to expand into a new full day care nursery which is scary to say the least! After plenty of research we have found a building in a great location that has the potential to make a fantastic nursery. My wife has the legalities/practicalities of running a nursery under control, we have costed out the start-up, and the finance is in place.

Now what we don't have any experience of is commercial leases, and this is where I am hoping someone can point us in the right direction. I am determined that we get get this part of the process right and I am not prepared to rely on the conflicting advice I have found on the Internet.

We have not engaged in any negotiations with the agent as yet, other than confirming that the landlord would be happy with the proposed business and building alterations that we need to make, and we have made an application to the council for change of use to the building , so how should we proceed?

Do we need to employ a surveyor at this stage? Do we need a solicitor at this stage? Do we need both? would either be able to help us with negotiations? If not, how do we make decisions on repairing type/lengths/cost of lease and what are the implications? We have no idea how these negotiations would go or how far we could push it, bearing in mind suitable buildings are very few and far between.

Phew, I dont think I have written that much since I was at school! If you have read this far and not got bored, thanks.

Keith.

 

[StevensOnln1]

At the very least, have a solicitor go through the lease before you sign. You might get more responses if you post in the legal forum.

 

[Banned]

Re lease, agree the "heads" with the landlord/agent then let your solicitor deal with it from therein.

Surveyor will depend on the building condition, what you wish to do with it and what's in the lease - which your solicitor will advise.

 

[Banned]

Oh, also be aware that on this forum you are still taking advice from the internet!!

 

[kulture]

Remember on a commercial lease everything is up for negotiation. Unfortunately if your landlord knows that you are very very keen on the property and there is none similar available it will limit your room for negotiation. It is always better to negotiate when you can give the impression that if you do not get what you want you will walk away.

So if you are going to invest money in the property, you need to have a lease long enough to get a return on that investment. That said you will need a break clause or two in the lease so you can terminate it after a trial period (a year,or two or three).

Further you should ask for an initial rent free period, say 6 months (why not, they might say yes or suggest three months). Any new business needs an initial rent free period to get going and established.

Naturally you try and agree less that than the advertised rent. See what similar properties are going for. Don't be afraid to offer a lot less.

Then you want to have a go at the type of lease. Landlords want you to sign a full repairing and insuring lease. This effectively means that ALL the building maintenance is your responsibility and at the end of the lease you need to return the building to an agreed state (hence the need for a detailed surveyor report). Ideally you need to get this changed to an internal decoration and insuring lease. So you are NOT responsible for the building.

The above points are typically what is agreed as the basic heads of agreement.

Then you need to have a solicitor to go through the lease to not only ensure that the agreement has been encapsulated in the lease, but to also ensure that there are no nasty surprises in the lease. Typically to ensure that the rent review is fair, that there is a way for you to appeal and negotiate a rent review, that the landlord actually has the right to let the property, etc etc

NEVER sign anything without a commercial solicitor.

Finally Banned is right, take all advice on a public forum with a pinch of salt. Some may be right, some may be horribly wrong.