Can you negotiate a commercial lease?

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Can you negotiate a commercial lease?

 

Whether you’re setting up in business for the first time or are looking to expand into larger premises, the process of negotiating a commercial lease can be fraught with difficulties. We look at the most important points to consider and ask whether it’s possible to negotiate a better deal for yourself.

Lease length

Depending on the nature of your business, the length of the lease you require will vary. Typically, retail leases extend to around 10 years, while office space leases begin at five. However, leases can also run from one or two years up to 25. If you’re interested in long-term stability for your business, negotiate the amount of time you feel is appropriate.

A break clause is also important to consider. These usually come into effect at around three to five years. If you do break before the agreed length of time of the full lease, you will still be liable to pay stamp duty, regardless of any break clauses.

Renewals

The Landlord and Tenant Act (1954) gives you the right to choose whether to have the right to automatically renew your least at its expiry, or to be excluded from such protection. If long-term security it important to you, make sure that you have a renewal right written into any contract you sign.

Rent

If your lease is longer than five years your landlord may require a rent review after this period. Some may even seek a review after as little as three years. Examine the lease carefully to see what terms the landlord imposes. Depending on market conditions, it may even be possible for you to negotiate the rent down rather than up!

Also consider asking for a rent free period at the start of your contract – this initial period is where most financial cost is incurred and a couple of months without the additional burden of rent may be the boost your business needs. Because he or she won’t have to pay business rates during this time, your landlord may look favourably on this suggestion too.

Repair costs and service charges

Carefully check the lease for ‘full repairing and insuring’ terms which may mean that you’re responsible for making extensive repairs, the benefit of which you may not fully see if your lease finishes soon after. Clearly, it’s important to maintain the property to a good standard but, in cases where the landlord is responsible for maintaining the exterior of the building, you should also be wary of incurring extra service charges they might want to pass on to you. Try to limit these to routine repairs and maintenance as opposed to structural repairs.

A commercial lease is a complex document and it’s vital that both tenant and landlord get it right. It should be clear and set out precise legally-binding obligations in order to achieve peace of mind for both parties. And while it’s possible that you can negotiate on your own behalf, if you have any doubts whatsoever, it’s always advisable to seek clarification and guidance about your legal position. That’s where our team of experts come into their own. Eddisons can offer you advice, interpretation and general guidance on all aspects of negotiating a commercial lease to help your business prosper from the outset.

A commercial lease is a complex document and it’s vital that both tenant and landlord get it right.

 

Written by: John Padgett on Friday 19/02/2016

 

Warehouses for Sale or to Let in the UK

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Warehouses for Sale or to Let in the UK

Barker Storey Matthews now part of Eddisons have the expertise and local knowledge to help you find the perfect location for your commercial property letting or purchase. Our expert team have worked with a variety of different businesses including major corporate organisations and local authorities and are best placed to identify suitable areas and optimal facilities for your commercial property whether looking for large warehouses with additional forecourt space or smaller warehouses with three-phase power supply.

Whether you are a small business which warehouses products in the basement, or a large company looking to invest a long-term storage solution, our selection of available warehouses for sale or to let can provide you with the space you need to grow and develop your business. We have a range of warehouses for sale or to let, prominently in the East – making it easier for you to choose the right storage space for your business.

Finding the right location for your business is of key importance when deciding on a warehouse for your company. Warehouses that are well-placed, close to strategic junctions, and with good connectivity, facilitate the movement of goods. We are one of the biggest independent commercial property firms in the East, with offices based in Cambridge, Huntingdon, Peterborough and Bury St. Edmunds.

Here at Baker Storey Matthews now part of Eddisons, our expert team has decades of experience and have been recognised for our award-winning services helping to find solutions for each of our clients. With the knowledge to guide and advise you at every stage of the process in choosing one of our warehouses on sale for your business. Whatever your goal or needs, we can assist you in finding the perfect space, land or opportunity for your next commercial property venture.

If my business rates seem too high, can they be revalued?

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If my business rates seem too high, can they be revalued?

 

In England and Wales, business rates are based on the rateable value of non-domestic premises. Once set by the Valuation Office Agency (VOA), the rateable value usually applies for a period of five years.

A business rates ‘multiplier’ is also set by the government, and used to arrive at the amount due for each non-residential building. If you disagree with the valuation applied to your premises, there are some routes available for appeal.

Initially, you need to contact the VOA with the reasons why you feel the valuation is incorrect, but it’s worth remembering that there is no guarantee it will be altered in your favour.

The next step would be business rates appeals which is an area Eddisons has vast experience in.

Can business rates be revalued?

Business premises are generally revalued every five years to take account of ups and downs in the property market. As the last revaluation took place in 2010, the next one was expected to be in 2015.

Unfortunately for many businesses, the 2015 revaluation has been postponed until 2017 for England, Scotland and Wales, meaning that most commercial premises will retain the value applied in 2010.

But will a revaluation make a difference to your business rates bill?

A delay in revaluation is not going to reflect current property market values, and many small business owners have objected to this postponement. But even if the value of some premises was reduced should the 2015 revaluation have gone ahead, the government’s general premise with this system is to maintain a neutral financial position overall.

Their intention is to only increase the total national bill for business rates in line with inflation, and they achieve this by adjusting the business rate multiplier accordingly. Some business owners may be disappointed with the result, therefore, even after a revaluation has taken place.

More about appeals to the Valuation Office Agency

If your rates seem to be excessive and the VOA does not agree that they should be changed, you can lodge an appeal. Prior to this, you need to ensure that the details used to value your premises are correct.

If not, you can request that they are changed, and also check your valuation against other similar properties in your area.

There are various grounds for appealing the rateable value of your premises, including:

  • An incorrect valuation
  • Failure to include material changes in the property valuation that have not been taken into account
  • Changes to the property have been incorrectly documented by the Valuation Office Agency

In most cases, you only have recourse for one appeal, so it pays to make sure that all your facts and figures are correct. In this respect, you will need a specialist RICS-approved rating surveyor – such as those within the Eddisons rating team – to make sure that you are using reliable information about your business property.

It is worth noting that a revaluation of your business premises could result in higher bills rather than a reduction. If you choose to hire a rating surveyor, they should inspect your premises, look at the current assessment, and advise you on whether this could be a risk.

Business rate reliefs may help to minimise your bill
Various reliefs are available in relation to business rates. These include:

  • Small business rate relief: to be eligible, the rateable value of your business premises has to be less than £12,000. In addition, a small business multiplier is used rather than the regular multiplier, in an effort to reduce the burden for small business owners.
  • Retail relief: this could be available if you run a shop, café or restaurant. The property has to have a rateable value of £50,000 or less.
  • Rural rate relief: rural businesses may potentially be entitled to a reduction of 50% to 100% of their business rate bill.

Business rates have been a significant issue for many business owners during the last few years, but particularly during the economic downturn when valuations were based on a stronger property market.

Obtaining professional advice is essential if your company is to navigate successfully through troubled financial times. The Eddisons Business Rates team are dedicated to providing a professional and dynamic approach to conducting rating appeals on behalf of clients. To have an informal discussion with a member of our Business Rates team on the services and mitigation schemes we provide, please call 0333 6000 11.

 

Written by: Craig Newton on Wednesday 25/11/2015

 

Beginners’ guide to investing in commercial property – Eddisons

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Beginners’ guide to investing in commercial property – Eddisons

 

A distinctively different asset class from residential property, commercial real estate has plenty to offer in the way of gains to savvy investors.

The UK’s commercial market is set to enjoy huge gains as investor confidence has returned to the market following the 2007 recession, with deal volumes at the close of Q3 2015 totalling over £50 billion. It isn’t too late to move into this market, and with the specialist knowledge and assistance of commercial property experts, investors can find incredible deals in established markets such as London and elsewhere throughout the UK.

Understanding the basics

Commercial property is, by definition, real estate that is used for business purposes.

This can therefore include a range of properties, from warehouses to offices, car parks, retail space, and even vacant land. You can invest indirectly through a fund such as a REIT, or directly by investing in a fund that holds physical property in it’s portfolio. Alternatively, you can invest directly by simply acquiring the physical asset yourself. A collective investment scheme is perhaps the easiest way for first-time investors to break into this market.

When a conventional bricks-and-mortar fund invests directly, they will buy the property and assume responsibility for the maintenance and rent collection. While there are certainly benefits to this method, there are some difficulties, the obvious drawback being that large buildings like offices and warehouses are not easily or often bought or sold. Another factor to consider is the cost of buying such a property outright, along with the time and effort associated with running the property, leasing it, and collecting rent.

Therefore, many buyers examine the prospect of a property securities fund, which invests in the shares of listed property companies. Investors also have the option of directly purchasing shares in a REIT, a real estate investment trust, which will normally have a portfolio of numerous properties.

Prime, secondary and tertiary commercial property

Commercial properties are broken down by asset class based on their value, and are categorized as being primary, secondary or tertiary property.

Prime property is the most valuable, high-quality property, normally located in central areas of large towns and cities, and therefore more likely to draw in a high quality of tenant. Secondary and tertiary property can be found in less prime locations, but still have lots to offer investors. However, a smaller pool of tenants means there is a higher risk of prolonged vacancy rates, or periods when the property lies empty.

Whether investing in any property in any category, it’s important to bear a few things in mind when entering the market. One thing to think about are vacancy rates; not only can an empty property put a dent in your cash-flow, but it can attract thieves and miscreants that can cause huge amounts of costly damage. Finding high-quality tenants to avoid defaults on rent is important, and so you should always ensure a guarantor is in place when leasing a property.

Volatility, diversification and liquidity are three aspects of investment that those interested in commercial real estate should be keenly aware. Working alongside a specialist firm with experience in this sector can help you make an informed decision and protect your investment.

 

Written by: John Padgett on Thursday 22/10/2015

 

Got an Industrial Requirement – How can we help?

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Got an Industrial Requirement – How can we help?

 

Are you looking for Industrial property or warehouse space? Are you unsure on what you need?

At Barker Storey Matthews now part of Eddisons we have undoubted experience in dealing a wide variety of commercial property and may be able to assist you at the start of your search by identifying a number of points you need to consider before setting out to view potentially suitable properties. Not only will this help in identifying the right space for you but will reduce the search time you may have to spend in relocation. So, ignoring the actual size of the space – as we assume you pretty much know this – a few pointers to get you started:

(a) Height – what is the minimum working height you need – think about the fact that some industrial units will have a flat roof. Also think about steel frame construction so height to the underside of the frame. Height is more appropriate when considering warehouse units.

(b) How many loading doors do you need – again perhaps more critical for warehouse property – and height of the doors – do you need articulated lorries to back in?

(c) What sort of/number of lorry movements do you have and the size of lorries that you use or are to visit?

(d) What office space do you need? / How many office staff are employed?

(e) How many car parking spaces are required? – something more critical when looking at office property!

(f) Do you have a specific power requirement? If it is excessive you need to think about power availability in the area.

(g) Do you need a dedicated yard area – this often reduces the number of suitable properties as detached units are in shorter supply.

Help us to help you. Identify your requirements in detail from the outset and your relocation should be easier to implement.