amorgan
25-06-2007, 16:53 PM
Hi all,
I am familiar with residential, but commercial seems to be a dark art. We are making the transition from a home office to commercial office space with the view of slowly growing the business. I have found three potentials, though one is by far more suitable in terms of actual space versus cost. The landlord is very old and lives above it, but this is not a problem as I think we will make considerate neighbours as well as tenants. However, it does me all negotiation has to be done through their agent. We have received an in principle agreement and I have quite a few questions. It is probably better for me to understand them now before it goes to the solicitor and it may help others in the future looking for the same answers.
The letter states the following terms:
A lease of six years to include the right to assign and a rent review at the end of the third year.
Six years is definitely longer than I think the business will need. As such, I think a break clause is definitely needed. I would like it after a year, but would settle for after 18 months, possibly two - is this likely? There is also the sad risk that the landlord may die and the place be sold on to somebody who is less reasonable and screws us with the rent rise
A commencing annual exclusive rent of £7000.
Does 'exclusive' rent have a hidden meaning such as it does not hidden costs such as insurance and service charges - or the opposite, that it includes everything?
A rent free period of five weeks from the commencement of the tenancy.
The premises to be taken in their present condition.
The present condition is extremely basic to say the least. They were last updated in 1989 and last redecorated around the same time. There is no carpet, no parking, no overhead lighting, no security system, no double glazing (but lots of drafty windows), and no hot water. There is however, at least a working toilet - though it is accessed via a single door from the ancient kitchenette area. HSE regulations require hot water to be provided, so a condensing boiler or little electric water heater needs installing. The kitchen needs replacing, the whole place needs repainting/decorating, the floor needs levelling. Basically all the things an employee might reasonably expect if they work in an office. Initial estimates from contactors suggest it would cost at the very least £5000 to do. I am happy to take the space on as is and do the work as we go along and pay for it directly as well as do some of the work myself , such as repainting(I have some good contacts). In exchange I would want a much longer rent free period - is this generally accepted? I guess I would also have to make sure that I rent is not increased based on the improvements we have made?
We would be moving in straight on the heels of the previous tenant so there would be no void periods for the landlord. My impression is that the landlord and his son would probably go along with this, but of course I am having to deal with the agent and they need to justify their fees. The agents are also aware I am new and will doubtless negotiate accordingly in their favour. They could of course tell me to sling my hook and hope to find somebody else to take the place on - which is my fear of course
Any thoughts or advice would be much appreciated.
Thank you, in advance
I am familiar with residential, but commercial seems to be a dark art. We are making the transition from a home office to commercial office space with the view of slowly growing the business. I have found three potentials, though one is by far more suitable in terms of actual space versus cost. The landlord is very old and lives above it, but this is not a problem as I think we will make considerate neighbours as well as tenants. However, it does me all negotiation has to be done through their agent. We have received an in principle agreement and I have quite a few questions. It is probably better for me to understand them now before it goes to the solicitor and it may help others in the future looking for the same answers.
The letter states the following terms:
A lease of six years to include the right to assign and a rent review at the end of the third year.
Six years is definitely longer than I think the business will need. As such, I think a break clause is definitely needed. I would like it after a year, but would settle for after 18 months, possibly two - is this likely? There is also the sad risk that the landlord may die and the place be sold on to somebody who is less reasonable and screws us with the rent rise
A commencing annual exclusive rent of £7000.
Does 'exclusive' rent have a hidden meaning such as it does not hidden costs such as insurance and service charges - or the opposite, that it includes everything?
A rent free period of five weeks from the commencement of the tenancy.
The premises to be taken in their present condition.
The present condition is extremely basic to say the least. They were last updated in 1989 and last redecorated around the same time. There is no carpet, no parking, no overhead lighting, no security system, no double glazing (but lots of drafty windows), and no hot water. There is however, at least a working toilet - though it is accessed via a single door from the ancient kitchenette area. HSE regulations require hot water to be provided, so a condensing boiler or little electric water heater needs installing. The kitchen needs replacing, the whole place needs repainting/decorating, the floor needs levelling. Basically all the things an employee might reasonably expect if they work in an office. Initial estimates from contactors suggest it would cost at the very least £5000 to do. I am happy to take the space on as is and do the work as we go along and pay for it directly as well as do some of the work myself , such as repainting(I have some good contacts). In exchange I would want a much longer rent free period - is this generally accepted? I guess I would also have to make sure that I rent is not increased based on the improvements we have made?
We would be moving in straight on the heels of the previous tenant so there would be no void periods for the landlord. My impression is that the landlord and his son would probably go along with this, but of course I am having to deal with the agent and they need to justify their fees. The agents are also aware I am new and will doubtless negotiate accordingly in their favour. They could of course tell me to sling my hook and hope to find somebody else to take the place on - which is my fear of course
Any thoughts or advice would be much appreciated.
Thank you, in advance