A HANDY GUIDE TO LEASING YOUR OWN BRICKS AND MORTAR
By Josh Rose, our resident property estate agent at Raven Rose.
Leasing a property is no insignificant decision. You’ll need to be clear on your concept and plans first, and know what characteristics you’re looking for in a site. How many covers do you want (this will determine size), over how many floors? Will you want external space, kitchen extraction, air conditioning? These are essential components which you must lay out clearly, and will guide you towards the right site for your business.
Once your goals are set, you’re ready to start browsing. Follow these steps to find the brick-and-mortar of your dreams, make sure you’re asking the right questions, and come to a contractual agreement that makes sense for you.
1. Location
2. Budget
Understanding who your customers are to better inform your choice of location is essential. Here are a few things you need to consider:
- Demographics. Who is your customer and where do they live, work and hang out?
- Accessibility and visibility. Can your customer get to you easily? Do they know you’re there?
- Competition and planning. Is the area already saturated with businesses like yours? Are you going to be allowed to operate the way you want to in this location?
This is the MOST important consideration — how much money do you have to spend? This will dictate every aspect of your search and it’s absolutely crucial that you know – or at least have a set of parameters for – how much capital you have for the project.
These are the things you need to consider:
- Upfront costs. Rent deposit, stamp duty, professional fees, shop fit.
- Ongoing costs. Rent, business rates, service charge, insurance, utilities.
- Third party costs. Lawyers, agents, designers, architects, builders, consultants (planning, M&E etc), contractors.
- CAPEX (Capital Expenditure). The total cost of the build.
3. Find a site
4. Ask the right questions
Searching for retail and leisure property is very different to finding a flat to rent. Listing platforms do exist, but they are not (yet) as effective as Rightmove or Zoopla. Properties listed are often out of date and deals for the best properties are often done before they even have a chance to make it onto a website.
Here are your best options:
- Foot patrol. Get out there and walk the streets. Look for letting boards, vacant shops or simply note down the addresses of your ideal site.
- Direct approaches. If there’s a site that takes your fancy, why not directly approach the owner of the business? Remember to always be sensitive with your approach and be extra careful not to scare staff into thinking their jobs may be at risk!
- Land registry. Track down the owner of a vacant property using the government’s platform!
- Agents. Instruct a professional site-finding agent to do all of the hard work for you, plus give you access to off-market opportunities, key info on how much you should be paying, experience in navigating the complexities of securing a site, and their network of professional consultants.
Asking the right questions is essential to save time and to get you closer to the right property.
- Is a new lease available or is it an assignment?
- If it’s an assignment – how long is left on the lease? Whats the rent? When is the next rent review? Is there a break clause?
- If it’s a new lease, how long is the lease that the Landlord is offering?
- What are the Landlords aspirations for their building?
- Whats the quoting rent?
- Is the unit fitted?
- What is the timing of availability?
- Will the Landlord be carrying out any works?
- What is the proposed handover condition?
5. Negotiate a deal
So you’re ready to make an offer. The more detail you can include in your offer letter, the more professional you’ll come across to the Landlord or their agent and the more likely they’ll take you seriously. To give yourself the best chance of securing the deal, the offer should be presented in a professional Heads of Terms (HOTS) style. The more you agree up-front, the smaller the chance of costly delays.
There are many angles to consider:
- Lease. Length, break option, renewal rights.
- Rent.
- Rent review. Frequency, basis.
- Incentive. Rent free, capital contribution.
- Surety. Rent deposit, guarantees.
- Service charge, insurance, and other costs.
- Use.
- Alienation. Assigning, subletting, sharing.
- Repair. Responsibility, schedule of condition.
- Alterations. Structural, non-structural.
- Handover condition. Landlord vs. tenant works.
- Conditions.
Normally, an agreement is based on having three documents agreed and signed. The lease, the rent deposit deed – detailing how much the deposit is, how it is held and potential return mechanisms – and the licence for alterations – documenting the works, if any, that the tenant will be carrying out.
It might take a few months to find the site that’s right for you but it’s important you don’t rush into one that might mean too many compromises. Find the right location, determine your costs, and establish your terms as clearly as possible.
A deal is not a deal until it’s completed! It sounds simple, but it’s easy for people or businesses to get carried away and start shouting about their new site before the lease has been signed and finalised. Only when you get the thumbs up from your lawyer can you pop that champagne.