property-scene Image 2
In the first of two columns, Ken Butcher of West London landlord and property developer, SEGRO, highlights the key things to look for when negotiating a lease on a new property.
“Imagine you’re running a growing business and about to take on a lease for new premises, there are many things to consider before you sign on the dotted line.
Once you have settled on your preferred property you should agree a Heads of Terms document, which will outline the key terms of the deal. This type of document is often used in business transactions made between two parties. As with any legally binding document, it is important to engage a solicitor to assist with the process, but agreeing the main points before appointing a solicitor can save money and time, as it means both parties enter discussions with all the major areas of the lease already agreed.
It may sound obvious, but the first thing to check when agreeing the Heads of Terms document, or when reading through your agreement, is that property’s address and location is correct, including the full postcode and size of unit. Check the measurement of your unit, as industrial/warehouse buildings can be measured in various ways.
Most landlords will offer some form of incentive, such as a rent free holiday, a capital contribution to the tenant or fit out to help to reduce the cost and disruption of business It is also important that the Heads of Terms state any work the landlord intends to do before you move into the property, as the works are likely to be done prior to the actual lease completing. You should also document what work you plan to do, as this should be formally agreed by the landlord in a separate Licence for Alterations document.
Another important aspect included within a Heads of Terms document is the amount of rent deposit required by the landlord. This could be six or nine months worth of rent, depending on the strength of your business, that should be securely held by the landlord for duration of your occupancy or until your company accounts meet certain criteria – make sure you are aware of the amount required and ensure the funds are available.
Overall, when reading through your lease, it’s important to understand what it contains and you are clear on the lease length, which is usually between five to 10 years. Landlords are often willing to offer flexible leases with break options and this is something you should ask about when discussing your lease terms.”
SEGRO’s London assets are located across more than 60 estates and clustered around the key Heathrow, Park Royal and Greenford markets and in and around the M25, M40 and A40 corridor. To find out further information about SEGRO, please visit www.SEGRO.com, or contact SEGRO’s customer services on: 01753 537171.