Frequently Asked Questons
If your question isn't below, please send it into us and we'll happily answer it for you.
Useful abbreviations:
PSF: Per square foot.
Rent is sometimes quoted as a ‘per square foot’ figure rather than an overall annual figure, so multiply that rate per square foot by the size to calculate the annual rent payable.
PAX: Per annum exclusive.
This means that the figure quoted does not include any other costs such as service charges, business rates, building insurance or running costs.
PCM: Per calendar month.
Lease Terminology:
1. Full repairing and insuring
This means that the tenant is responsible for the cost of insuring, maintaining, repairing and decorating both the internal and external parts of the property throughout and at the end of the lease term, which may be by way of a service charge.
2. Internal repairing and insuring
As above, but the obligations refer to the internal areas of the property only, i.e. roof, external decorations etc are excluded.
3. Service Charge
A charge to the tenant usually calculated on a percentage of floor area to cover those items under ‘1’ above.
3.Licence
Normally granted for a term of up to 6 months. Can sometimes be inclusive of rates and running costs, depending on the type of property.
What does 'Market Levels' mean in relation to a Rent Review?
Market levels indicate the comparable costs against other properties similar to the property having it's rent reviewed. An example comparable factor would be the rent being paid by a tenant with similar premises in a similar location to you.
What does it mean if a lease is ‘outside the Act’?
If you are told that a lease is ‘outside the Act’, it excludes sections 24-28 of the Landlord and Tenant Act 1954.
In simplistic terms, this means that you will not have an automatic right to renew your lease at the end of the term, although you may be able to negotiate a new lease upon its expiry. You should always take legal advice in this regard.
Almost all sub-leases are granted Outside the L&T Act.
I’m looking for offices – how much space will I need?
This varies for each company and their individual requirements, but the general rule is approximately 100 sq ft per person, i.e. 3 people will be circa 300 sq ft.
Remember that you may need extra space for meeting rooms, storage, equipment etc, depending on your type of business and requirements.
I’m looking for a shop but I don’t understand the uses – Help!
Retail uses are set out under the Town and Country Planning (Use Classes) Order 1987, which dictates the lawful use which may be carried out at that property.
The classes were updated in 2005 to include two new uses, and are as follows:-
A1 Retail shop
A2 Professional/Financial Services (i.e. Bank/Building Society, Estate Agent)
A3 Restaurant/Café (preparing and serving hot food to customers on the premises)
A4 Drinking establishments (i.e. wine bar, pub)
A5 Hot food take-away (i.e. not a sit-down restaurant)
Is it possible to change the use on a property?
Yes, dependent on the type of property, and whether a change of use is acceptable to the Landlord.
To enable a change of use, a formal planning application needs to be lodged with the local Council, and is likely to take a minimum of 8 weeks for a decision to be made.
The decision on whether to allow the use to be changed will depend on a number of factors, including the impact on the local community/surrounding area, proximity to other premises with similar uses, and whether it complies with the Local Plan.
However, some leases/freehold titles may have prohibitions against certain uses, so a change of use may not always be allowed.
How is rent paid?
Rent is normally paid quarterly in advance, either by way of a cheque, or by bank standing order (which is often preferred by Landlord and Tenants alike).
The normal quarterdays are:
25th December
25th March
24th June
29th September
You will usually receive an invoice from your Landlords advising when rent (and service charges if applicable) are due, and if VAT is payable on the rent, then a VAT receipt is usually issued once funds are cleared.
Interest is often charged on late payment, so even if a rent demand is not issued, you are still liable under the terms of your lease to pay the rent/service charge in good time of the due date to avoid charges being incurred. Many leases state that if payment is not received within 14 days of the due date then interest will be charged at a prescribed rate.
What about insurance?
Landlords will normally handle buildings insurance cover, and re-charge this to the tenant on an annual basis, whether in its entirety for a sole-occupation building, or a prescribed percentage for buildings in multiple occupation.
However, tenants are responsible for insuring their own contents, as this is of course specific to each and every company.
How much are business rates?
This varies for each property, and you will find the rates payable figure for the current year on page 2 of our details.
This amount is paid in 10 monthly instalments to the Local Council.
What costs can I expect to pay upon completion of my lease?
Again this can vary, but most Landlords will expect a deposit equivalent to 6 months rent (plus VAT if this is payable on the rent) to be lodged with their Solicitors at the time of completion. This is held in a designated account, and is returned to the tenant at the end of the lease term with accrued interest, (providing there are no rent arrears, and that all outgoing dilapidations liabilities have been dealt with properly).
You will also need to lodge the first quarters rent in advance (from the date of completion to the end of that quarter), together with the proportion of buildings insurance up to the date of renewal).
Solicitors fees can vary greatly, so we recommend that you ensure the costs of your appointed firm are known from the outset.
Will you take up references?
Yes. We usually ask for the following:-
Bank
Accountant
Existing landlord (if applicable)
3 x trade references
We also ask for copies of the last 3 years trading accounts where appropriate.
How long will it take between accepting an offer and completing the lease?
This can vary depending on the complexity of the lease, the number of parties involved and the speed of Solicitors, but we normally estimate 6-8 weeks from terms being agreed to completion of the lease.
Do I need to be aware of any regulations when starting a business or moving property?
There are issues you will need to be aware of where Government guidelines have recently changed and/or new laws have been introduced.
In all of the following cases, the responsibility has been transferred directly to Landlords (and in turn their tenants where full repairing leases are held), who are known as ‘Dutyholders’.
The 3 main areas you will need to be aware of are:
- The Control of Asbestos at Work Regulations 2002
- The Regulatory Reform (Fire Safety) Order 2004
- The Disability Discrimination Act 1995 (DDA)
We would recommend that you seek advice on the above prior to entering into any lease agreement.