THINKING OF STARTING YOUR OWN BUSINESS?

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1 THINKING OF STARTING YOUR OWN BUSINESS? NEED A PROPERTY TO HELP GET YOU STARTED? Tel: Contents Type of Property What Size Do You Need? Office Space Location What is a Lease/Licence? What Type of Lease/Licence? Rent & Rent Reviews Business Rates Service Charges Insurance Utilities and Other Outgoings Guarantees / Rent Deposits Proposed Use Alterations to the Property Certification Dilapidations We are here to help... As one of the UK s largest private owners of commercial property, we know a thing or two about renting property. We have a wide range of property within our portfolio from factories and warehouses to offices, retail units and starter premises for new businesses. Our tenants cover a wide range of sectors and include well known names such as Interserve, Handicare, Omron, Balfour Beatty, Lidl, Aldi, Home Bargains and Primark as well as many smaller businesses. There s a lot to consider when renting a business property for the first time. This guide provides details of useful resources and points to consider when leasing a property. Points to Consider Type of Property Many business properties are allocated a specified use by the Local Authority (retail, industrial, warehousing, offices etc). So think carefully about what your business does so you pick the right property for the use. What Size Do You Need? You want something that meets your needs with possibly room to grow, but select a property that s too big and your overheads may be higher than you can afford. Commercial properties are generally advertised in sq.ft/sq.m and it can be difficult to judge what size you need. Warehousing/Production Space Some comparable approximate sizes: Single Garage 175 sq.ft (16 sq.m) Double Garage 400 sq.ft (37 sq.m) Tennis Court 2,100 sq.ft (195 sq.m) Football Pitch 75,000 sq.ft (6,968 sq.m)

2 Example Sizes 1,000sq.ft Office Space Depending on the nature of your business we would estimate approximately sq.ft per person to allow for workspace and storage. Decide what sq.ft/sq.m you need before you start to make enquires, it helps to ensure you get information on properties that are suitable for your requirements. Location You have decided on type and size of property, but where do you want to be located? Is good motorway access essential? What about where your workforce is based? Do you want to be part of a business park? Is free parking and good security on your wish list? Carry out an internet search all our properties are available to view online at Drive round your preferred location and take details from the To Let boards Make a shortlist of properties and contact us to arrange a no obligation viewing. Additional Points to Consider 6,000sq.ft 24,000sq.ft 50,000sq.ft 75,000sq.ft Minimum/maximum dimensions do you have specialist equipment that needs a certain space? Height of the property do you intend to install racking etc? How much loading/unloading and parking space do you need? Do you require a specific electricity supply? What utilities do you need to operate your business? What is a Lease/Licence? Lease/Licence the legal agreement between you and the Landlord, permitting you to use the premises must be signed by both parties. It will usually include the following information: The space you are occupying usually with a plan Rent Service Charges Building Insurance Dilapidations (putting the property back into the same condition as when you took occupation) Responsibility for maintenance and repairs to the building and external areas Length of the Lease Rent reviews Your rights, obligations and liabilities Your Landlords rights, obligations and liabilities Leases typically have agreements of between three and 25 years and can offer long-term stability.

3 What Type of Lease/Licence? Most leases are granted on a full repairing and insuring (FRI) basis meaning that the tenant will be responsible for all external and internal repairs, maintenance and decoration of the premises. Some leases are Effective FRI meaning an additional service charge is payable for the upkeep of common areas of a property e.g. shared roofs or common communal areas of an office. Tenants may renew the lease at the end of the tenancy as per the Landlord and Tenant Act Sometimes leases (generally less than 3 years in length may be granted outside the Act). This means you will have no right to stay or renew the lease when the tenancy ends. Licences are generally used for short terms lets, where both the tenant and Landlord want flexibility. Licences generally offer more flexibility and can usually be terminated at short notice by both parties. LCP offers two options specifically designed for new and small businesses on The Pensnett Estate, Kingswinford: Quarterly Licence on some small industrial properties circa 500 1,000 sq.ft Monthly All Inclusive Licences on offices located in LCP House Other options may be available on other properties throughout the portfolio please contact us for further details. Leases/Licences can be complex, so we recommend you consider professional help from a solicitor or chartered surveyor when considering legal documents relating to your property. Rent & Rent Reviews To start with, the rent will be whatever you agree to pay the landlord. The lease will state how much it is, when, and how often it is payable. Rent is usually paid quarterly in advance by standing order exclusive of rates, service charge, building insurance and V.A.T. However under some licences you may be able to pay monthly as they offer more flexibility. As leases can be for periods of up to 25 years and beyond they will often include periodic rent reviews. Business Rates Business rates are charged on all non-domestic premises, including shops, offices, warehouses and factories. If you use a building or part of a building for business, you will probably have to pay business rates. Your premises will be given a rateable value by the Valuation Office Agency, which your Local Authority will use to calculate how much you should pay. Business rates are used to help fund local services like the police and fire services. Your Local Authority will send you your annual business rates bill for the coming year in February or March.

4 Service Charges A Service Charge is an additional cost to the rent. This covers services provided by the Landlord that benefit a number of tenants and can include items such as estate security services, maintenance of estate roads, landscaping and common areas This is usually calculated on a rate per sq.ft basis (this can increase or decrease per annum depending on costs and work carried out). Occasionally for small properties a service charge can be based on a percentage of the rent so you know exactly what the payment will be. The service charge usually comprises the direct cost of the services plus a management fee for the administrators of the services. You have the right to inspect the service charge accounts. Insurance The Landlord will normally insure the premises and recover the premium from the tenant (sometimes the premium may be included as part of the service charge). You will need to take out additional insurance to cover risks such as loss or damage to contents. Utilities and Other Outgoings The ingoing tenant is usually responsible for all utility costs (gas, electric, water etc) and other outgoings arising from his occupation of the premises. There are exceptions to the rule including offices at LCP House, The Pensnett Estate, Kingswinford which are available on a simple monthly licence, fully furnished with the rental quoted including; Local Authority Rates, water rates, building insurance, building maintenance, heating, lighting, cleaning, telephone line rental via the switch board, Wi Fi Access and Reception Service. Guarantees/Rent Deposits Before granting a lease a Landlord will often request references and company accounts to confirm you are able to pay the rent. If you are unable to provide these ie. you re a new business you will normally be asked for a Rent Deposit or a guarantor for your liabilities under the lease. Proposed Use Your lease will limit the use of the property to a specified purpose (for example, B1 (Offices). The lease will usually put the responsibility on you to check that your proposed use complies with any planning consent. Additional restrictions or covenants in the lease or imposed by the Local Authority can include rubbish disposal, parking, noise and lighting. It s best to check before you sign the lease. Alterations to the Property Before you start any alteration work, you should check the details of the lease. You may need to get permission from the Landlord. Unless the lease expressly prohibits alterations, the Landlord may not unreasonably withhold consent to tenants improvements.

5 Certification All landlords of commercial buildings are now obliged to provide prospective tenants with an EPC to indicate how energy efficient a building is. Depending on the building you will also be issued with the following: Electric Certificate Gas Certificate Asbestos Report (not applicable to properties built after 2000) Dilapidations Most leases are granted on a full repairing and insuring (FRI) basis meaning that the tenant will be responsible for all external and internal repairs, maintenance and decoration of the premises. You will in the majority of cases be required to reinstate the property to its original condition before the end of the lease. Sometimes the Landlord will permit a Schedule of Condition to be annexed to the lease limiting a repairing obligation for a property. This is prepared by the ingoing tenant and submitted to the Landlord for approval and normally contains a range of photographs recording the condition of the property prior to occupation. Useful Websites Contact Us For more information or to make a no obligation appointment to view: Tel: