If you’re thinking about renting your commercial property, there are many factors that you should consider first. Being a commercial landlord comes hand-in-hand with a number of responsibilities and risks. It is important to get it right from the start – before signing a lease with a new tenant – to prevent any potentially serious legal issues from arising further down the line.
In the following blog, we share a number of top tips for commercial property landlords and highlight the importance of seeking an experienced commercial property solicitor for such matters.
1. Research the ‘quality’ of your new tenant
Before entering into a commercial lease agreement with a new tenant, be sure to do a little digging first. It’s important to understand who they are, exactly what they do and how reliable they are likely to be – particularly in terms of paying their rent and complying with other lease covenants.
Perhaps start by conducting a general business background check and asking for references from current or previous landlords. If it is a limited company, inspect their accounts and figure out how you would recover the monies due if they ever failed to pay rent. It may even be worth asking the company directors to provide a personal rent guarantee or to negotiate an initial rent deposit.
2. Gain professional advice on rent charges
You want to be sure you are getting the most out of your commercial property rental; therefore, before agreeing on a rental price with a new tenant, it is worth consulting a property surveyor first.
A surveyor will compare your property with others in the same area, assess its advantages and disadvantages, and give you an accurate market rental value. You can then use this value in the initial commercial lease agreement and include a ‘rent review’ clause for 3-5 years down the line.
3. Clearly outline the basic terms of your lease
When it comes to a commercial tenancy agreement, transparency is the key to success. You need to be as open as possible with your tenants from the outset, clearly outlining the basic terms of your lease in the ‘Head of Terms’ document and ensuring you are both on the same wavelength.
Aside from the monthly rental cost, you should clearly specify your terms on tenant subletting, maintenance issues, service charges, and insurance policies, to name just a few.
4. Consider your future intentions
As a commercial property landlord, it is important to think long-term and consider your future intentions for the building. For example, do you intend on selling the property at some point? Whilst you, personally, may be happy with an informal tenancy agreement, potential buyers could be discouraged by such informality and request for an official agreement to be put in place.
You should also consider your own plans and whether you might need the property for yourself in the future. If so, there are certain bureaucratic procedures that need to be followed before you sign on the dotted line, giving you the right to lawfully remove tenants at the end of the lease.
5. Invest in a commercial property solicitor
If you are entering a new lease as a commercial property landlord, it is a good idea to take a step back and seek legal advice. It can be very difficult to go back and renegotiate on something that you have already agreed. By investing in a commercial property solicitor, you will gain expert advice on your terms before signing and any potential future tenancy issues can be avoided.
Contact Prosperity Law today
Here at Prosperity Law, we have a fantastic team of commercial property solicitors, who demonstrate a significant level of knowledge and experience in this area. If you would like further advice as a commercial property landlord, particularly regarding a new lease agreement, please feel free to get in touch. Either call us on 0161 667 3686 or fill out our online contact form today.
