Leasing a place for your business? Look into these factors next time.
Leasing a premises for a start-up or an existing business can be a challenging task for any business owner. Not only, it’s location! location! location! but, there’s various elements to consider in your lease prior to inking the dotted line.
Next time, before signing a lease, consider these factors:
How many years am I signing up for?
Normally, 3 years is the industry norm. You don’t have to sign up for 5 years straight (unless you really want to!). Rather, you can sign up for 3 years and ask for a further term of x 2 years to be take up at your option. This way it gives you freedom to consider another place without having to cut-short your contractual obligations.
Understand the annual rent increases
There are 3 ways in which rent can be increased: fixed rate (e.g.-3% annually), market review or consumer price index (CPI). Your lease proposal should mention how exactly the rent is to be increased. If not, make you sure you ask your agent as this is often an over-looked area in a lease.
Ask for a rent-free period
This is subjective and depends a lot on the landlord preferences. Obviously, any landlords won’t like the idea of having a no-rent period from their tenants but, you’ll be surprised that some landlords are actually happy to grant you 1 or 2 months free in rent given the circumstances.
Outline tenant works & landlord works
You need to clearly outline to your agent, what kind of work you are going to conduct in the premises. (E.g.- Are you installing anything extra to the building? are you hoping to change the structure of the building to suit your needs? what kind or products/services will this building used for?).
And, just like the way you have to disclose your works, landlords also have an obligation to make sure everything is compliant and in working order prior to you moving in. (E.g.- fire-services, roller doors in working orders, exit-lights etc).
Request a condition report
This is a pit-fall I see a lot of businesses fall into. To put it simply, let’s say there are structural damages in the building when you move in. At the end of your tenancy, the landlord might ask you to fix these damages although they were already there when you arrived! A condition report prepared by your agent will outline all damages and defects to the building so that you are only liable to the damages caused by you at the end of a tenancy.
In my experience as a leasing agent, most tenancies have ended up with great outcomes but, there’s few which have turned sour. Only if they considered the above- mentioned factors (and few others!), these pitfalls could’ve been avoided.