What does leasing business premises involve?
It's a popular option, but what does it involve?
Many small businesses own their premises – particularly new firms that may still be in the garage or back room of the house where they started. Within a short time, however, expansion looms. Some still buy small premises but this eats up a huge amount of potential capital that could be better used within the business. Therefore, for many a business, leasing is a good option.
Few small businesses can take this step without borrowing anyway, so while owning saves monthly rent bills, it boosts interest payments. This also means interest rate rises can affect your business. Leasing is the more popular solution but this is still a huge step. It is a major financial commitment, usually the biggest any small business will make, and not a decision to take lightly or without professional help.
No matter how simple the requirements of your business, leasing can be a difficult process. Even on the smallest premises, leases are complex, hefty documents written in a language almost unintelligible to anyone but lawyers and surveyors. A glance through the endless queue of cases going the through the civil courts proves that interpretation of the many rules and restrictions varies even within these groups of experts.
There is a thread of logic running through the process, however. It helps to understand the basic principles when dealing with professionals and only you will know how they affect the core of your business.
What is a lease? A lease is a legal contract that defines the conditions under which a property is used. The first shock to many tenants is that they normally pay all the costs involved, even though the lease is usually drawn up by a landlord’s solicitor. The second is how complex the paperwork can be.
“Even on the smallest premises, leases are complex, hefty documents written in a language almost unintelligible to anyone but lawyers and surveyors. “
Despite recent efforts to make these documents more user-friendly, they remain highly detailed, listing all the rights and obligations of your business. Leasing clauses appear to go on forever because after hundreds of years of legal practice and case law, it has become traditional to cover almost any possibility that could affect the relationship between tenant and landlord.
Rarely are two leases identical – which is why they must be checked by a lawyer and a surveyor qualified at dealing with a business. Leasing agreements are generally printed in a standard document that is issued to all tenants but this may not suit every business. Professional advisors can negotiate changes to make it more amenable.
Their ability to do this will depend on several factors such as how much similar space may be on the market, the condition of the building and your willingness to pay the asking rent for premises for your business. Leasing could be the answer to you premises problem.