Select one of the frequently asked questions below to learn more about buying, selling, and renting real estate. Also, begin to think about important things to consider when diving into your real estate search.
Commercial Property
What is an FRI Lease?
FRI stands for Full Repairing and Insuring. In its simplest form it means that you as the tenant have total responsibility for the repair of the property. This differs significantly from typical residential leases and you should be aware that the covenant to ‘keep the premises in repair’ carries with it obligations. This will likely include to bring the property back into good condition, even if you were not responsible for the damage.
What is a break clause and do I need one in my lease?
A break clause allows either the landlord or the tenant to bring the lease to an end earlier than the lease expiry date. This is usually actioned in writing and a period of notice, typically 6 months will be required. Sometimes a tenant exercising a break option will have to pay a penalty for doing so and a landlord would be less likely to offer incentives for an incoming tenant if the break clause is early within the term.
Can I alter the property I'm leasing?
Most leases will make provision for ‘non-structural’ alterations which would include stud walls, storage racking and added security measures etc. However, despite how nice you think the new office you have formed is, the landlord reserves the right to ask for any such work to be removed at the end of your tenancy…regardless of how much it cost you! We would always suggest seeking the landlord’s formal consent to works at an early stage to avoid breaching the terms of your lease.
What sort of deposit do I need to rent commercial property?
This will vary quite dramatically from landlord to landlord, tenant to tenant and property to property. Typically if you have a trading history, can show profit through audited accounts and can provide references then most landlords would ask for the equivalent of three month’s rent. If you are a newly formed limited company then it can be double if not triple that amount. We suggest that you provide as much information as possible at an early stage to enable the landlord to make an informed decision.
I am looking for offices, how much space will I need?
This will obviously vary dramatically depending on your own specific requirements but as a very rough rule of thumb, we say to allow approximately 100 SqFt per person. Therefore if you employ 10 people an office unit around 1,000 SqFt will likely suit your needs. Remember you will also need to make allowance for storage, separate meeting rooms and break-out areas etc.
Business Rates
Who has to pay Business Rates?
Occupied Properties: The person or company that occupies the premises needs to pay the business rates. Sometimes the landlord of the property may charge the occupier a rent that also includes an amount for the business rates. However that is a private matter between the landlord and the bill will remain in the name of the occupier, and if it is not paid, action will be taken against the occupier, not the landlord, to recover the amount due.
Unoccupied Properties: The person or company that has the right to occupy the property needs to pay any charge that is due (e.g. the leaseholder, tenant or the freeholder). If a tenant moves out of a property but still holds the lease, the tenant remains liable to pay any unoccupied rate charge that becomes due until the expiry of the lease. If however the tenant’s lease ends, the landlord will be liable for the charge.
How are Business Rates Calculated?
The Council will work out your bill by multiplying the rateable value of your property by the appropriate rate multiplier, which the Government set each April.
For example, the rate poundage for 2014/2015 is 47.9 pence in the £. If your rateable value was £20,000 it would be multiplied by 48.21 pence and the amount you would have to pay for the year would be £9,640.00.
The amount quoted in the example may be subject to any transitional arrangements that may apply to the property and does not include any entitlement to any relief such as Small Business Rate Relief which the occupier may be entitled to apply for.
What is the rateable value and how can I find out what mine is?
Each non-domestic property has a rateable value which is set by the valuation officers of the Valuation Office Agency (VOA), an agency of HM Revenue & Customs. They draw up and maintain a full list of all rateable values, available on their website at www.voa.gov.uk. The rateable value broadly represents the yearly rent the property could have been let for on the open market on a particular date. Note that it is the rateable value that determines the amount you pay, not the marketed rent.
Do I qualify for Small Business Rate Relief?
In general Small Business Rate Relief will be available if you occupy only one property and its rateable value is under £12,000 or if occupy one main property and other additional properties whose rateable value does not exceed £2,599.
For more information on Small Business Rate Relief click here. https://www.gov.uk/apply-for-business-rate-relief/small-business-rate-relief
Are there any other reliefs available?
Other reliefs that may be available are
- charitable relief for registered charities and not for profit organisations
- rural rate relief for certain types of properties within a rural settlement
- hardship relief for ratepayers who are suffering financial hardship
- partly occupied relief where a property is only occupied in part
- local rate relief
What happens if my property is left empty?
The owner (the person entitled to possession) of a property is liable to pay 100% of the basic occupied business rates. Rates will not be payable for the first three months that a property is empty. This period is extended to six months for qualifying industrial properties.