Leasing business premises should never be done without consulting with your lawyers & solicitors, otherwise you could end up paying a lot more than you need. Professional legal help to go through the lease contract will ensure that all is above board and the landlord is not trying to pass some of his costs on to you. Sadly, not everyone is honest and some people maintain that it is up to the lessee to read the contract if they don’t want to be caught. And that is true to a great extent.
Here are 9 points to consider when leasing business premises.
- Rent is usually set by the measurement of the area. You need to know if the wall thicknesses, restrooms, elevators and other common areas are included in the price.
- Many commercial lease agreements contain a clause stating that there will be an annual increase in rent that is percentage based. Make sure the increase is not too high, especially if you are starting a new business. It is okay to negotiate for a cap on the percentage.
- Make sure the use allowed in the lease is appropriate for what your business does.
- Repair and maintenance is part of most business premises. Find out what you have to pay towards it. Paying for things like the air/con, heating, the actual building and equipment should be looked into. The cost should be shared.
- Look at the time-frame of the lease and make sure it will suit you. If you are a new start-up, it might be better for you to pay more for a shorter lease until you see how your profits are, rather than signing up for years and then deciding to close down or move – and have to keep paying. A sublet clause included will allow you to find another tenant to cover the rent.
- If you need to make changes to the premises, you will need to know who will pay and who will ‘own’ them after the lease is up.
- There are taxes, rates, insurance and many other costs associate with owning a business and leasing premises. It is incumbent on you to find out who has to pay them. You, the landlord or both of you.
- If your business is going well but you have to sell up for health or other reasons, a Right of Assignment clause in the lease will allow you to transfer your lease to the person who buys your business. You should also find out if there is a penalty for early termination of the lease.
- There are many additional clauses that can and may be added to your lease agreement. Taking professional legal advice will ensure you don’t get any nasty surprises.