Struggling with commercial lease

[tjosoo]

Hi,
This is my first post

I have been looking for a retail property to lease for my fast growing beauty business, (I know another beauty salon, but please dont run away).

I have done endless amounts of research, sought advise from solicitors, accounts and business advisers.

I found a property that I was interested in and asked for the terms of the lease at which point I was advised to put forward an offer to negotiate the terms, my offer was rejected, which I half expected and a counter offer given, I then put forward my counter offer.

I waited over a week and heard nothing from the agent so chased them about 3 times before I received a reply stating that my counter offer was not accepted and the landloards would not move from their first offer.

From all the advice I have been given I was expecting more negotiations not a straight out, its this or nothing.

I hate to play the female card as I'v never felt that being female is an issue, but im am wondering if I am being taken for a mug, I look young (though i'm not that young) have a child and work in beauty, therefore I am starting to get the impression people think I will just sign anything.

Do you think their offer was fair am I expecting too much, I will just add that there are two other units near by up for lease all owed by the same landloard (I had a look on the land registar) So you would think they want to fill them.

The property was advertised at £10,000 per anum, their offer is:

5 year lease

2 Months rent free

£9300 per anum

FRI lease

Break clause for year 3

3 months rent deposit

The property needs new flooring and decorating, which I advised I would do at my own expence.

It has no heating so I would need to look into that as well

Thank you for reading

 

[vvaannmmaann]

Hi and welcome to the forum!
How much where your first and second offers?

 

[tjosoo]

my first offer was really low as i had to start somewhere.

my second offer was £8000 per anum
I thought the rest of the terms were fair except 3 months rent for deposit.

From previous advice i have been given 1 months rent deposit is more the norm.


thank you

 

[islandgirl]

Hi, Ive just taken on a lease and its scary being tied into it, so dont rush it. I know youd like it asap but it only goes as fast as the agent wants it, I feel. I think your offer is not unreasonable at all and they may be getting a bit greedy. Give yourself a boundary that you wont cross because once youve signed , youre in for the long haul. I had to pay 3 months up front + all legal fees . I negotiated a break clause of 18 months and a lease for 3 years instead of 5. I think they think they can play you, so you may have to say 'Im out' and go back in a month?? cat and mouse games , hate it, just want to get on with the job!

 

[tjosoo]

iv worked out my maximum and iv told the agent that im not accepting the offer.

I hate all this chess playing, seeing if they can out rank you, i lthought it was going to be more about meeting half way.

There is another property i like but it owned my the same people, so probably not worth trying.

 

[vvaannmmaann]

Quite right.Walk away from it - who knows they may come back to you next week!

 

[arcon5]

Maybe I'm just Overly sceptical, but I do think sometimes they take a little longer to assess how waning you are before negotiating further. In your case in one week you contacted them 3 times and they are probably thinking you are desperate for it so they can dictate the terms to you.

You are signing a FR and I lease so much more negotiation needs to go in to it - to restrict your liability for things like structural works and roof etc. ideally you should be offering to sign an internal only lease. FRI leases are of high risk and can cost you dearly if anything happens or the roof leaks or something. If there's a flat above then even more reason to restrict your liability.

 

[arcon5]

Btw 3 months deposit seems the norm to me.

Also consider the rent review clauses, these can be a killer.

Make sure each party pays their own legal fees. Most LLs will try get you to pay theirs but this isn't really the norm. Just a case of you don't try, you don't get.

 

[Talay]

The reason they are not taking you seriously is because you are doing the negotiating yourself and you have missed the glaring full insuring and repairing issue, you do not state whether it is within or outside the Landlord and Tenant Act and you've insulted them with too low an offer to be taken as a serious candidate, amongst other things.

Backtracking from this position may be impossible but at least you haven't saddled yourself with a huge milestone of a lease, the financial implications of which you don't seem to fully comprehend as shown by your comment "I thought the rest of the terms were fair".

I don't mean this to be a dig at you but slow down, get some help, professional help that is and let someone else do the negotiating this time. Your time will come.

 

[wevet]

The problem is that you are probably getting rejected not by the owners of the property but by their agents who often act as the managing agents.

Agents in my view, particularly in commercial property, are one of the biggest blights on business and frequently do a disservice to their clients by being inflexible on lease terms and the result is that commercial properties often remain vacant for much longer than is necessary,

As a case in point many years ago, in 1997, I sought to rent the petrol station component of a defunct motor trader dealership. By that time it had been empty for 3 years. The complex was up for sale or let. I offered a decent rent £25k a year) on a short term licence 3 months notice on either side.

The offer was rejected. That property remained empty until redeveloped in 2011.

By coincidence I bumped into the guy who had owned the site and he had never been presented with my offer.

It is a rare town, these days, that does not have a number of empty shops. It is a buyers market so look around.

However, if you are set on a particular shop try to track down who the owner is and ciircumvent the agent by making an offer direct.

 

[tjosoo]

Maybe I'm just Overly sceptical, but I do think sometimes they take a little longer to assess how waning you are before negotiating further. In your case in one week you contacted them 3 times and they are probably thinking you are desperate for it so they can dictate the terms to you.

You are signing a FR and I lease so much more negotiation needs to go in to it - to restrict your liability for things like structural works and roof etc. ideally you should be offering to sign an internal only lease. FRI leases are of high risk and can cost you dearly if anything happens or the roof leaks or something. If there's a flat above then even more reason to restrict your liability.

Thank you, from the advice I have been given it seems very hard to get a landloard to agree to and internal only lease,

 

[tjosoo]

Btw 3 months deposit seems the norm to me.

Also consider the rent review clauses, these can be a killer.

Make sure each party pays their own legal fees. Most LLs will try get you to pay theirs but this isn't really the norm. Just a case of you don't try, you don't get.

sorry I did have a rent review clause in my offer and also that each party pays their own fees

 

[tjosoo]

The reason they are not taking you seriously is because you are doing the negotiating yourself and you have missed the glaring full insuring and repairing issue, you do not state whether it is within or outside the Landlord and Tenant Act and you've insulted them with too low an offer to be taken as a serious candidate, amongst other things.

Backtracking from this position may be impossible but at least you haven't saddled yourself with a huge milestone of a lease, the financial implications of which you don't seem to fully comprehend as shown by your comment "I thought the rest of the terms were fair".

I don't mean this to be a dig at you but slow down, get some help, professional help that is and let someone else do the negotiating this time. Your time will come.

I have had professional help and was advised to negotioate myself and then my solicitor would check the contract before signing, I am starting to think a change of solicitor maybe in order, maybe they didnt take me seriously either.

Could you please explain what you think I dont understand about the finacial implications.

I do not feel your having a dig you are the first person who has been honest to me, Thank you.

 

[Talay]

I have had professional help and was advised to negotioate myself and then my solicitor would check the contract before signing, I am starting to think a change of solicitor maybe in order, maybe they didnt take me seriously either.

Could you please explain what you think I dont understand about the finacial implications.

I do not feel your having a dig you are the first person who has been honest to me, Thank you.

Whoever advised you to negotiate yourself was not offering professional advice. If you haven't already paid their bill, I wouldn't. Seasoned people with decades of experience still use professionals in this area whereas the inexperienced, often looking to save money, jump straight in.

If you are questioning your choice of solicitor, then you already know you are in the wrong place, so dump them and get a recommendation, not a trawl across the internet or up and down the High Street. Hard I know but necessary.

The financial implications of a full insuring and repairing can be so onerous that you should never take on that property. Yet you seem to dismiss them casually and in another post state "from the advice I have been given it seems very hard to get a landloard to agree to and internal only lease" which is again, very poor advice. Where is your surveyor in this and I don't mean the house buying kind.

When I was much younger, I would have agreed to almost any clause or covenant simply to get the property I wanted. Act in haste, repent at leisure is the maxim here. There are lots of properties, do not be rushed into any decisions.

Get all your ducks in a row and go digging to find the owner of this property, not merely their paid servants. Have a professional prepare your offer, through a Ltd Co. to preserve your finances if all goes awry.

 

[tjosoo]

I have an appointment for thursday with a new solicitor

 

[tjosoo]

Whoever advised you to negotiate yourself was not offering professional advice. If you haven't already paid their bill, I wouldn't. Seasoned people with decades of experience still use professionals in this area whereas the inexperienced, often looking to save money, jump straight in.

If you are questioning your choice of solicitor, then you already know you are in the wrong place, so dump them and get a recommendation, not a trawl across the internet or up and down the High Street. Hard I know but necessary.

The financial implications of a full insuring and repairing can be so onerous that you should never take on that property. Yet you seem to dismiss them casually and in another post state "from the advice I have been given it seems very hard to get a landloard to agree to and internal only lease" which is again, very poor advice. Where is your surveyor in this and I don't mean the house buying kind.

When I was much younger, I would have agreed to almost any clause or covenant simply to get the property I wanted. Act in haste, repent at leisure is the maxim here. There are lots of properties, do not be rushed into any decisions.

Get all your ducks in a row and go digging to find the owner of this property, not merely their paid servants. Have a professional prepare your offer, through a Ltd Co. to preserve your finances if all goes awry.

Thank you again, I have an appointment Thursday with a new solicitor, he has been recommended, but then so was the last one.

My company is already registered as a ltd and I have an accountant, so hopefully that side of things is all good as have been trading for 2 years.

I located the registered owner of the property on the land register, but I will wait to speak to my solicitor before I do any more crazy things.

 

[kulture]

Please note a good commercial solicitor SHOULD recommend that you use a surveyor or professional negotiator for the negotiation. It would be unusual for the solicitor to do the negotiation for the initial main terms.

 

[arcon5]

I don't think it's necessarily that bad to agree head terms then use a solicitor to fine tune it

 

[tjosoo]

I spoke to a new solicitor on thursday, he seemed quite impressed with what I knew so dont feel stupid now.

He is putting a proposal together for me, so will see what happens