Subletting some space to another business

[Hans Gruber]

We have some space in our building and I'm considering letting a another local business move in and rent it. We will be on a shared electricity and water meter, so rent will have to factor this cost (I've asked to see their current bills). The room they will use will have a locked door, but will of course be our address.

Can anyone help with what I need to consider? I guess this is sub-letting (ok as I own the building). Will our insurance provider need to know? Are there any rules/regulations we need to follow? We don't manufacture onsite but they do, so I hope we don't need MHRA? I assume as a separate business they would have maintain their own liability insurance.

If they went bust owing money, could we in trouble? Would I need to get paperwork to show they are a separate business? Would a lease document suffice? And/or copies of their liability insurance certificate?

Thanks in advance.

 

[fisicx]

Get a solicitor on board ASAP. It's not sub-letting, it's a simple lease.

You will need insurance, ideally separate meters, a lease, maybe planning permission and all sort of other things. Which is why you get a solicitor onboard as they will make sure it's all done correctly.

 

[Hans Gruber]

Thanks for your reply. To give a bit more detail we are an opticians and the other business is a glazing lab, who's services we use. It would benefit us commercially to have them onsite. I'm concerned if they closed owing money we could be viewed as liable. They are a LTD company as are we.

If they are going to move in I will need some electrical word doing, so could look into a separate meter for them. My issue is if they don't last I would then have an unnecessary meter. Can a meter be disabled if no longer used? Or would i be stuck paying standing charges it?

I'm pretty good at monitoring our energy usage, so I would be able to work out the additional usage. The benefit for the other business is we could either split standing charge, or I would just wouldn't pass this on as an incentive.

If we share a meter I would require the lease to allow for variation if they end up using a crazy amount of energy. Would it be wise to a get break clause?

 

[fisicx]

Talk to a solicitor! They will be able to advise on all your questions and discuss liabilities. Every single lease will be different. There are hundreds of details need negotiating even down to things like who cleans out the gutters.

Talk to your electricity supplier and ask them about sub-metering for business.

 

[Hans Gruber]

Again thanks. We previously had our own lab but decided to outsource, so the lab area is already set up. Many opticians have onsite labs. the only difference here is it would be a separate company. Would council need informing e.g. change of building usage or planning?

I will of course seek legal advise if it looks like going ahead. I'm just testing the water atm.

 

[fisicx]

Would council need informing e.g. change of building usage or planning?

Probably not. But pick up the phone and ask them.