Four Pointers when considering taking Offices to Lease

You have made up your mind to set up or build your own business and are now thinking of taking offices to lease of some business premises, then take a little time to review the 4 pieces of advice below:

A - Tenants Details - Submit the name of the considered tenant (making certain you give the proper lawful entity ie: sole trader name, limited business name, names of all partners) and the address; if it is a company then also give the business number and registered office address. Also furnish any trading name if this is different.

B - Your referees details - You will need to submit names, addresses and telephone numbers - you will ordinarily be tender references from any actual landlord, your solicitors, your accountants, a main supplier and your bank. If it is a new business then you may have to aquire personal and bank references for each individual and if a new business, then for each personal guarantor as the business will not have a past.

C - The rent - Put forward an give for the rent you are willing to pay. This is often talkable so do consider making a smaller offer. Be aware that rents can be subject to Value Added Tax dependant on whether the landlord has chosen to tax or not and although this makes no difference to the amount you pay because you can redeem it, you will have to have enough cash-flow to pay the Value Added Tax before you can reclaim it but your accountant who can inform you further on this point.

D - The term of the lease - Again this is normally talkable. Depending on the position in which you operate, leases tends to be in multiples of 3 or 5 yr. Term of 3, 5, 6, 10 and 15 yr are quite commonplace. Generally the smaller and lower cost the office the more inclined that the landlord will agree to a smaller lease term and the same is correct of under-performing regions where there is a high turnover of tenants (an area to repel away from!).

Landlords take care to like longer terms rather than briefer but if you are concerned about taking on a long term lease, contemplate proposing a tenants only break choice, say at the exit of year 3 and maybe also further on in the term. Evaluate how long you can hold out for economically if things go dreadfully wrong and propose a break at that point.

Unfortunately many businesses seem to collapse, so it is a must that you work out your exit procedure in advance. It is so much better to have a clean way out from the lease after which your liability will terminate rather than to try to find someone to take an duty to sub-lease from you as you will remain held to account for the completion of any assignees commitments and for the lease more specifically if you have a sub-tenant.