Renting Commercial Premises For The First Time

[Kate Rothery]

Hi all, been a while since I have been active on the forum but been enjoying reading through the threads again lately.

I started an online brand a year or so ago and things have gone pretty well - so I am now at the stage where I am considering rental a commercial property to open a physical shop and naturally progress things. Silly question though - I have never rented a commercial premises before!

Its likely when I find a property I will need to apply to change its usage type, there will be some other licences I need to obtain too (as my brand is alcohol related). How does this work? if I find somewhere and agree a rental fee, am I able to make the contract conditional that it only goes into force if I get the licenses I need to apply for/change of use agreed etc.

What I dont want to do is take a property for X a month for X years, and then of course not get the permission I need to use it! I am sure this is a very basic question so please be gentle with me!

Kate

 

[HFE Signs]

Hi Kate, You could ask the landlord for a license agreement (monthly payments) until you get your license to trade your specific goods from the premises? Also, speak to your local council, they should be able to tell you if 'change of use' is required.

 

[Kate Rothery]

Hi Kate, You could ask the landlord for a license agreement (monthly payments) until you get your license to trade your specific goods from the premises? Also, speak to your local council, they should be able to tell you if 'change of use' is required.

Ah I see - so still paying the monthly rental for a period, but without being tied in to the full lease period until everything is approved?

 

[HFE Signs]

Ah I see - so still paying the monthly rental for a period, but without being tied in to the full lease period until everything is approved?

Yep

 

[Gyumri]

It gets complicated if you move in on a monthly basis and then find you can't get an alcohol licence if you need one.

The sensible way would be to tick all the boxes first before taking on a lease. In other words reign in your enthusiasm and instead plan carefully.

Alcohol licensing

Information on the different types of alcohol licences available and guidance on how to apply for them.

www.gov.uk

 

[WaveJumper]

I think the first thing you need to consider is what current Use Classes will your business fall under, if you don’t currently know you can check this quite easily online. Once you know this it will help you establish which commercial units suit your needs, perhaps easier than picking one that has the wrong usage class and will not be granted a change by the local council.

You certainly don’t want to be moving in a premises which has no hope of the classification being changed. If you do find a unit which suits your purpose but does not have the correct classification, and the landlord is keen to have you as a tenant they can approach the council themselves to get the usage change on their property.

If you are selling alcohol you are going to need some form of licence, are you sure you would be granted one, I would get the wheels in motion on this with the local council and get a conversation going regards to your plan’s possible location etc this way you will know in advance if and problems are going to arise.

I would not advice moving into a premiss, setting up business without the right planning in place, you’ll just get shut down and risk losing any investment you have put into the building, and certainly burnt your bridges with the council.

And lastly before you think of signing any lease documents get some proper legal advice

 

[MBE2017]

As above, and as you will see from several threads OP, get a good solicitor to check over and explain any proposed lease to yourself, IF you decide to go ahead.

Not wishing to sound negative, but since we are entering a very serious downturn by any standards, DO YOU really need the overheads atm? Check your figures carefully, and check them again, I wish you well, but take a look at most shopping streets will show you the state of retail at present.

 

[Ray272]

Maybe the OP is not fully aware of all solutions that are on hand. A shop for an online brand is one way but perhaps fulfillment would be better for an online brand as you could free up your time to develop your brand and have someone else handle your stocks and ship your orders. Very handy if you need to travel around to sourcing fairs and stuff like that and double down on the ecommerce aspects of your business.

 

[ecommerce84]

I would call the council licensing department and sound them out.

A license for a business selling alcohol online is a different kettle of fish to one that is selling alcohol on the premises for people to drink there and then.

Don’t sign anything without the advice of a commercial solicitor.

 

[Kate Rothery]

It gets complicated if you move in on a monthly basis and then find you can't get an alcohol licence if you need one.

The sensible way would be to tick all the boxes first before taking on a lease. In other words reign in your enthusiasm and instead plan carefully.

Alcohol licensing

Information on the different types of alcohol licences available and guidance on how to apply for them.

www.gov.uk

Hmm yes, clearly that's not practical - why would I spend £500+ applying for a premises license for a premises I have no rights to use. Hence my original question

 

[Kate Rothery]

I think the first thing you need to consider is what current Use Classes will your business fall under, if you don’t currently know you can check this quite easily online. Once you know this it will help you establish which commercial units suit your needs, perhaps easier than picking one that has the wrong usage class and will not be granted a change by the local council.

You certainly don’t want to be moving in a premises which has no hope of the classification being changed. If you do find a unit which suits your purpose but does not have the correct classification, and the landlord is keen to have you as a tenant they can approach the council themselves to get the usage change on their property.

If you are selling alcohol you are going to need some form of licence, are you sure you would be granted one, I would get the wheels in motion on this with the local council and get a conversation going regards to your plan’s possible location etc this way you will know in advance if and problems are going to arise.

I would not advice moving into a premiss, setting up business without the right planning in place, you’ll just get shut down and risk losing any investment you have put into the building, and certainly burnt your bridges with the council.

And lastly before you think of signing any lease documents get some proper legal advice

Thanks - the 3rd paragraph is actually the issue. I have been through premises licensing for alcohol before (but I owned the premises), it is more tricky when renting. The licensing authority actually have no power to decline a license, it isn't up to them, so they wouldn't be able to give any kind of indication before committing to a property. They are very much administrators in the process, and its whether objections are received to the application which decides whether it is approved or not

 

[IanSuth]

Thanks - the 3rd paragraph is actually the issue. I have been through premises licensing for alcohol before (but I owned the premises), it is more tricky when renting. The licensing authority actually have no power to decline a license, it isn't up to them, so they wouldn't be able to give any kind of indication before committing to a property. They are very much administrators in the process, and its whether objections are received to the application which decides whether it is approved or not

Maybe a stupid idea but have you spoken to any local struggling pubs with space - using a spare room of theirs would give them £ be in a secure building and likely make your licence application simpler as well. Could be done on an informal month by month basis first

Not only that but the patrons could test your mead

The pub we used ot meet at each Monday used to bottle and sell whisky and wine from an adjoining part of the building which is now the room the met in which is what gave me that thought

 

[Gyumri]

Hmm yes, clearly that's not practical - why would I spend £500+ applying for a premises license for a premises I have no rights to use. Hence my original question

Hi Kate - you're absolutely right! I hadn't realised that the price was now so high. It used to be a lot cheaper, so the option I suggested wouldn't make sense.

So your original "conditional" approach would be more sensible but also impracticable as there would be nothing to compel you to apply for a licence and even if you did it might then meet objections from local busybodys.

I can see the landlord not wanting to be locked in to something that might end up as pie in the sky.

Solution? Agree the rent etc but don't sign anything yet. Ask the landlord to hold the premises while you apply for a licence.

You take the risk that the landlord will rent to someone else in the meantime but if he sees you as a good tenant he will wait - especially if you have agreed in principle to paying him an attractive rent.

You can also agree terms for a lease in writing subject to you exercising an option to take it on, which of course you would only exercise if you get the licence.

You might have to pay the landlord something for that option so that he will agree not to market the property in the meantime.

Others here might have better ideas to suggest.

 

[WaveJumper]

Are you already selling alcohol on line

 

[Stuart Bailey]

You can enter into what is called an agreement for lease. This means that you will apply for the planning change (if required) and the licence and when they are granted you will complete the lease shortly afterwards. A lot depends upon whether the landlord is willing to wait until you get those documents in place which could be a few months. The problem with an agreement for lease is that you will have to pay for the legal fees for approving the agreement (and the lease) in advance before you get the planning and licence. The legal fees could be in the region of £2,000 plus vat depending on the terms of the lease and which firm you instruct. So if you don't get the planning or licence you will be out of pocket having paid for the legal fees.

The licence is a good idea but you will incur the costs of the shop fit up front and you are at the whim and mercy of the landlord, so if you do get the planning and licence he could hike up the rent or kick you out for another tenant.