More and more businesses are turning to rented or leased property for their company, and it’s not hard to see why. It’s more flexible than buying, and is generally easier to shift between properties.
However, it has to be a careful process. There are many pitfalls you can find yourself trapped in, so whether you recruit adequate legal help or go it alone, make sure you are well informed. The benefits of leasing are many, but in order to get there, you will have certain steps and considerations to make first.
So, to make the process a bit easier for you, this article will run down several of the most important steps to take throughout the leasing process. It’s only as hard as you make it, so stay focused and driven and you’ll find it a breeze.
Step 1: Find the right property to lease
Your business will operate in a specific industry, so it’s important to identify everything your business will need in a property. So, ask yourself: what do I need this space for? Will it be an office space to house me and my employees? Will it be a warehouse of sorts, that will be used for holding stock and finding products that people have ordered online? Will it be a shop, the central hub that will define the success of my business?
Once you’ve decided on a purpose, only then can you move on to physically finding a space to lease. It can be quite difficult to search through reams and reams of properties, so start narrowing your search.
Firstly, consider location. If it’s a space for your employees, do they all live within a commutable distance? Can they all get there, and get home, in a reasonable time each day? Happy employees are vital to the success of any business, and an arduous commute will not put them in a productive mood.
Then, consider any outside elements that could affect your space. Is it near a river that would be likely to overflow, possibly causing property damage? Is it close enough to the shops, petrol stations and other local amenities? Is there somewhere to go on a lunch break? What is the neighbourhood like? Is it near a main road? Traffic noise can be distracting and hard to minimise. Look at all the factors that you won’t be able to change, in order to reach a decision. If the place isn’t decorated, you can fix that. You can’t move a river, however, or change the atmosphere of a neighbourhood.
It’s also worth making sure you have ample parking space close by. On-site parking space would be even better, but this is rare and you could always add it later. If you aren’t sure where to look when browsing for a property, there are dozens of places you can try:
- Local newspapers and indeed, national newspapers.
- Contact your local council or government branch.
- Call up some local estate agents and make an inquiry.
- The internet – there are lots of resources that aid a property search.
- Ask family and friends who may be more familiar with the area.
Step 2: Draft a lease agreement
Lease agreements can last anywhere from three to 30 years, so it’s important that the terms of the contract are laid out clearly. You will have to negotiate with your landlord as to the specific terms, but you must settle on something that is right for your business.
It’s important to get legal advice at this stage and there’s no shortage of options, such as a Bannister Preston solicitor. Your contract will stipulate the precise details of your term, so it’s important to draft it correctly. Also, there may be something you miss when looking over it. As is the case with any contract, you can’t simply alter things further down the line. So, from day one, be thorough, decisive and well-reasoned – you’ll thank yourself in the long run.
Step 3: Consider the financial implications of leasing
Leasing and renting is a lot different than buying. You could have a lot more financial costs to deal with, so ensure your business can cover these expenses in its budget. Imagine your company in five years, six years or nine years. Plan ahead and gauge whether, in the long-term, leasing is the right financial decision for you.
To begin with, you’ll have monthly rent payments to pay. This will depend on the size of the property and what you use it for, and can be very steep in some cases. You’ll have to produce references to confirm you’re able to meet this payment each month. On top of your rent, you’ll have all the usual monthly suspects like gas, electricity, water and broadband. Businesses are known to use a lot of tech and appliances, so budget for some hefty monthly bills.
In terms of upfront costs, there’s the obligatory deposit. This is typically equivalent to a few months rent, so expect to shell out thousands of pounds upfront. This money isn’t gone forever, however, and you will get it back at the end of your term if everything is in order.
You’ll also need to pay a stamp duty, as well as get business insurance. Nobody said renting was cheaper than buying, but the costs are offset by being able to easily move properties.
Step 4: Changing, altering or extending the property
It’s quite common for businesses to grow, and if this happens, you’ll need more room. But, if you want to change anything about the property, you’ll need planning permission. Anything that alters how the property looked when you moved into it needs to be accounted for. That includes painting, extensions or adding new rooms.
You’ll probably need permission from the landlord, so be sure to contact him first. It’s also worth checking the details of the lease; if it doesn’t say anything about improvements, then you have more right to be able to do them. Above all, just be careful. That property isn’t yours after all, and you don’t want to land your company in trouble.