Taking on a new premises to run your business is not simply a cost but rather an investment. It is just one of the inputs required for you to do business yet it can and will dictate how your business evolves. Choosing the right premises is a big decision and research should be undertaken before signing and lease agreement.
Whilst we’re not solicitors and can’t advise you on the legal matters of taking on a lease, here are some handy hints for those of you out there considering a new lease.
- Is the premises suitable? Does it allow for business growth? Does it fit in with your 5 year plan?
- What condition is the building in? The tenant is usually responsible for repairs so have a building surveyor check the premises out and ask the landlord to carry out any repairs before signing. Take photos of the condition of the building before moving in.
- Be ready to provide a deposit or a personal guarantee. You may need to provide your business accounts and trade references. Your bank may need to be involved. If a deposit is involved ask that it is secured against payment of rent only and not repairs.
- Review and negotiate the term, options and reviews at intervals alligned with your business plan and expected growth. Ask for rent-free periods of fitout incentives as a new tenant.
- Consider the potential for breaking the lease and the likelihood of the lease being assigned to a third party (i.e. is it a specialised tenancy?). Include a provision for breaking the agreement may provide you with a degree of flexibility and certainty.
- Checks the estimated rates that are payable and understand that they will be payable on top of the rent. Do they need to be appealed before you take over?
- What are the VAT implications and is the property elected for VAT? Speak to your accountant and get the right advice.
Of course, this is only a guide and is itself quite brief in nature. There are many more considerations and you may wish to speak to an expert on the matter before making any commitments.
Are you looking for a new property?
Do you have your own tips to share?
What issues have you encountered?
Feel free to contact Pharmacy Consulting on 01252 302 342 should you wish to discuss.