Renting commercial premises for the first time is a huge step for any company, largely due to the hefty financial commitment it can bring. But, for the majority of us business owners, securing premises to work from is non-negotiable; whether it be an office, workshop or storage facility, they will all require you to sign a commercial lease. And surprisingly enough, there is a lot more to it than you would think. Of course, research is a priority, but there is always only so much Googling and sifting through clauses you can do…
To speed things up here are a few points to consider before leasing your commercial property, to help avoid getting trapped in an inflexible rental agreement for longer than you want.
Beware of hidden costs… You could end up paying out more than you expected!
If you are renting part of the landlord’s building such as an office space, it may appear cheaper than expected at first glance, but be aware that you may have a responsibility to contribute to the upkeep and maintenance of the whole building. This can include anything from the roof and wall structures to the lifts and reception area. So be prepared for this, and ensure that you have an idea of the annual cost, before committing to anything. You’ll also want to check beforehand how the utilities work – are things like electricity, water and broadband included in your rent? Does the space include regular cleaning? All of these things are added costs that you may not think about in the initial stages of looking at office spaces – but things that help you to gain a bigger picture of the actual cost of your space.
The upkeep of office space is really important: It gives visitors a good impression of your brand and also helps lift the wellbeing of your employees. You want them to enjoy their workspace. So, when damages occur and repairs are necessary, be aware of what you might be agreeing to regarding your obligation to manage repairs: you could find yourself faced with hefty bills. And this could even be as a result of an issue which may have pre-dated your lease! Again, it’s pertinent to ensure that you have an idea of the overall condition of the space prior to signing an agreement so that you have an idea of how much you’ll need in your contingency fund.
We can’t predict the future, in fact as business owners, we often struggle to predict the first quarter! So, what If your business grows or changes during your contract? Beware of clauses that could restrict business development. Be smart, ask for a break clause and user clause. These clauses can help futureproof you and your business.
A lease usually runs for a specified term, which both parties agree on before entering into the lease. This could be a 5-year term for example, but what if things change for you and your company within that time frame? If your business grows and the space becomes too small for your growing workforce, you may need to look at relocating. Having a break clause is sensible, it’ll ensure that the lease can be terminated earlier than originally stated if required.
This clause can be operated by just one of the parties, or you can add a mutual break clause in, this gives both the landlord and the tenant the power to execute it.
Leases normally have clauses that specify the type of activity the tenant can carry out in the premises. If your business is a website development company for example, and further down the line you wish to start a training programme, this might be prohibited under the original lease agreement. That’s why having a user clause can also be good for futureproofing. It will allow for the lease to be altered and changed during the specified term if you need it to be.
The above is by no means a full checklist of what is needed before signing a lease, but it will give you a head start of what to be aware of when it comes to choosing your next office space. You can head over to Gov.uk for the most up to date information.
If you’re currently looking for an office space which you can grow and develop in, without the worry of hidden costs and issues with your landlord, why not consider Bloxham Mill? We offer fully serviced offices which can be altered as your company grows! Our options are flexible and transparent to suit your business needs.