Top ten tips when acquiring commercial property
Acquiring a commercial property comes with a lot of considerations, options and decisions – but also many potential pitfalls for those without the expertise or access to good advice. Having successfully helped many clients with all kinds of different commercial properties, we have put together our top 10 tips for you to consider when acquiring commercial property.
1. Always use a lawyer… and a suitably qualified surveyor.
2. If you need to move in a hurry, look for properties where you will be taking a new lease direct from the landlord. Whilst it is, of course, possible to take an assignment or sub-let from an existing tenant, this inevitably involves obtaining the landlord’s consent which can potentially delay matters significantly.
3. If business continuity is critical to a smooth relocation, prioritise the ‘long-lead’ items and get these in place well in advance of any move. Connectivity is typically the biggest headache- any building with fibre connections and IT infrastructure already in situ is a big plus point.
4. Check out the service charges and/or estate charges if choosing a multi-let building or multi-tenanted estate. This is potentially a proverbial can of worms so find out what is included in the service charges quoted and what is not. Ask how the service charge is calculated, whether the costs are budgeted or actual expenditure, and find out what the managing agent’s fee is.
5. Check utilities. Are you paying for what you use or are you paying a contribution on a pro rata basis towards the overall costs of power to the property? If the latter, you may need to think carefully about who you are sharing your building with, particularly if they are heavy power users.
6. Always get a condition survey or building survey undertaken. If you are taking a lease on effectively full repairing terms, whether by taking on this responsibility directly or via a service charge, make sure there are no hidden costs or major repairs planned during the term of your tenancy.
7. Find out who is looking after the building. If multi-let, is there a concierge, a building manager on site or is the property managed remotely? Relationships are important and, in an ideal world, there should be somebody on site in order to respond immediately to emergencies or queries.
8. If you are looking for lease flexibility, think carefully about the structure, which can have a significant impact upon your SDLT liabilities. The tax to be paid on a 5 year lease with an option to extend for a further 5 years, for example, could be significantly lower than signing up to a 10 year lease with a 5 year tenant only option to break.
9. If you are running an international business dealing with customers or other group operations in different time zones, check that the building operates on a 24/7 basis. Not only is access important but establish what the arrangements are for other building services outside normal UK business hours. If, for example, your teams are working late doing business with the US West Coast, make sure that the heating/cooling/air conditioning is still running.
10. Look carefully at the requirements for alterations; when you move into a building you will be required to get the landlord’s consent to any proposed changes you wish to make to the layout etc. This will be documented in a formal Licence for Alterations. Once these have been approved, it is not unreasonable for the landlord to allow further non-structural changes without the need for formal consent as any changes will need to be reinstated at the end of the lease. This will save considerable time and expense as the landlord will expect you to pay their legal and surveyors fees incurred in giving approval.
These are our top 10 tips to help avoid potential pitfalls that can be encountered when acquiring premises. For further details and advice on a confidential basis, please contact Stephen Head at Hicks Baker on 0118 955 7089 or email email@example.com. To find out more about how Hicks Baker could help you visit our website.
Read our Stibo Systems case study, we helped this international data management company relocate to Reading town centre for greater control of environment and corporate image.