Should I pay for a property lease from a failed business?

[keepcalm]

Hello,

A local coffee shop closed around a year ago and the property has been vacant since with a note in the window saying it's available to rent.

I am interested in the property to use as a showroom space and can afford the rent £14k rent. Obviously I would need to apply for change of use...

The current business owner has 7 years left on the lease and want's £15k for it. Before I start to negotiate, I question whether it is worth this? I'm not getting any goodwill or taking the fixtures and fittings and essentially doing her a favour taking the property on.

Is it worth saying I'll take it, but not pay for the lease, or offer a smaller amount for the lease?

Any thoughts or advice appreciated.

 

[japancool]

Is it worth saying I'll take it, but not pay for the lease, or offer a smaller amount for the lease?

Did the coffee shop fail because it didn't get enough customers?

 

[Mark T Jones]

First and foremost, you need to consider what it's worth to you - which will be different (either way) from what it is worth as a a coffee shop location.

That said, it's been empty for 12 months, which would suggest it isn't desirable to others, so not worth anything.

 

[DontAsk]

That's her opening shot. Now negotiate it down. Every month you drag it out is costing her more rent. If she has any sense she will settle for less.

Also find out if she has a break clause coming up. She may be really trying it on, selling the lease when she actually has a way out.

What does the leaseholder say? Will he give consent to the sale?

 

[Paul Kelly ICHYB]

Sadly, there are some foolish people who will take up the lease and open up another coffee shop.

As mentioned - what is it worth to you?

I would negotiate to get a reduction, however, there is no guarantee that you will get change of use, so it is a risk. If you apply for change of use without agreements in place, you effectively open opportunities up for the seller to then look for other buyers!

 

[bovine]

Its been closed and vacant for a year, the current lessee is on the hook for nearly £100k, quite possibly personally if they went in as a sole trader or signed a personal guarantee. And they want you to pay to take on that liability? If the site/lease was in demand then I can understand a premium but without, pay them nothing.

They should be paying you, you would most likely be removing a massive headache from them.

 

[Newchodge]

By current business owner do you mean the owner of the ex coffeee shop or the premises' landlord?

 

[fisicx]

By current business owner do you mean the owner of the ex coffeee shop or the premises' landlord?

I was wondering the same thing!

@keepcalm - talk to the landlord not the leaseholder. You don’t want the old lease, you want a shiny new one.

 

[pentel]

They are paying £14,000 p.a + business rates if any.. They should be paying you to take it off their hands.

 

[WaveJumper]

As above you need to deal with the landlord and not the previous tenant who is obviously on the hook to his lease even though they are not trading.

Assuming the landlord is interested he will wish to due his due diligence on your good self, you would want the landlord to pursue the change of use.

Question why would you want this, what appears to be an expensive premises just for storage.

 

[Waddy]

Unless that particular location has some value, the lease has no value, it is a liability not an asset.

As for the location, what is the occupancy rate of business premises in that area? What is the market rate for similar premises in the area? If the occupancy rate is at or close to 100% and/or the rent is below market rate then it might have same value.

 

[Lisa Thomas]

Speak to the landlord about a new lease, rather than the ex tenant about the old one.

 

[Socio South West]

If you take over the existing lease get the property surveyed and check the lease carefully for the dilapidations clause.... it could land you with big expenses when the lease expires if the maintenance is behind.... or it could be a handy lever on price depending on the situation,

Similarly, if it is to be a new lease of the place as it stands get a survey of the place done - The outgoer doesnt appear to have much chance to pay for any dilapidation there may be, so you need a full defects report to be included in the lease, and either credit given to do the repairs yourself or excluded from the final survey when your lease expires.