Premium on Lease

[Ihaveadream]

Hi all

I have just been looking at possible shops to lease, one says that the lease is £6750 pa with a £5000 premium. I know this is probably a stupid question but what does that mean??
Thanks

 

[Banned]

Means they want £5k to let you have lease. It's a one off payment on completion.

It used to be common practice but not so much these days. The only reason to agree to it is if the shop is in a highly sought after area. If it's been empty for over six months it's probably not worth the premium.

 

[mhall]

It's also often referred to as "Key Money" - you get the lease then pay for the "keys". Still pretty big in Cornwall I am reliably informed by my Brother who tells me it is still very much the norm down there.

Personally I would never pay it unless the site is so special and lucrative that I couldn't do without it in which case it's a nice way of bringing the rent down.

 

[deniser]

There are other reasons why someone might ask for a premium:

1. they may have spent a lot of money on fixtures and fittings or generally on the premises which they wish to recoup
2. the rent may be less than the market rent (maybe because a rent review is long overdue) so that the lease has a value
3. there is some goodwill attached to the premises which has a value