Many businesses are currently considering moving premises either
due to downsizing, or to upgrade premises now tenants have more
negotiating power. If this describes you, consider carefully
the potential costs described below:
You'll know about removals charges, phones, utilities,
broadband, stationary, possibilities of delays (and further costs)
etc. If you're leaving your premises, there'll also be
substantial landlords' costs and other fees to pay.
Selling Commercial Property:
If you're leaving part-way through a lease term you should find
someone to buy your premises (you may even receive a premium).
1. As of October 2008 if you want to sell commercial
property, you'll need a
Commercial Energy Performance Certificate, similar to EPCs
required in HIPs, but more detailed. These are expensive
(from a few hundred to thousands of pounds).
2. Landlords require you to enter into a "licence to assign"
before allowing you to sell your interest in the
premises.
3. Landlords might inspect premises. If you've breached
obligations under the lease, e.g. redecoration, the landlord's
surveyor will give you a list of works ("dilapidations") to
complete before you can sell.
4. You have to enter into an "authorised guarantee agreement"
("AGA") which means: if the next tenant breaches covenants,
defaults or disappears, you have to take the lease back and pay the
rent. Fees for the licence at 2 and agreement at 4 will be
roughly £1,000-£1,500+.
5. Your chances of finding a reputable purchaser who the
landlord accepts (step 2) and who won't leave you in the lurch in
future (reducing step 4's risk) increases if you use a commercial
agent. Agents' costs are based on a set-up fee plus a
percentage of your premium and the rent etc.
6. You have to instruct your own solicitor. Costs for
selling a commercial premises start at about £1,000 plus VAT, but
can run to thousands of pounds.
Leaving Commercial Property:
If you're abandoning a business premises you could face the
following:
1. Landlords are due rent from until a new tenant arrives (or
a lease expires). Landlords must make reasonable efforts to
attract new tenants, which in this market could be many
months.
2. You remain liable for upkeep of the property and your
covenants (e.g. decoration).
3. Where property is in your company's name, landlords will
seek to enforce directors' guarantees (if any) making you
personally liable for 1-3 above.
4. If there's a rent deposit, landlords will take money due
from this.
5. If there's an AGA from the previous tenant, the landlord
may try to force the old tenant back.
The moral is: if you're leaving premises for financial reasons -
consider costings first. You may end up spending more than
you gain.
For a free consultation on the above or any commercial matter,
please contact Oliver Asha, on (DD) 01273 447067 (Switchboard)
08456 678 978 or via email to oliver.asha@acumenbusinesslaw.co.uk