Commercial property to let guide

If you’re interested in buying a commercial property, take a look at Perry Hill Chartered Surveyors’ guide and make sure you get the best return on your investment.

Choosing the location of your commercial property 

When buying any property, whether it’s residential or commercial, location is always going to be an important factor to consider. Town centre and prime business district locations are always in high demand but they come at a premium price. However, a lot of smaller businesses now deal remotely with their clients and simply require an out-of-town base for staff to drop in for meetings.

Your property purchase is always going to be an investment, just like when buying a house, it is important to look at the location and any future development area. These will all have an effect on your property’s value whether positive or negative.

Commercial property is a viable investment medium – commercial mortgages 

With attractive financial yields, a commercial property can make for a sound business investment to take advantage of. It’s also worth remembering that when you make an investment, you can deduct the tax from interest payments on commercial mortgages.

Get the right survey – commercial property surveyors 

Don’t just rely on the basic survey that your mortgage-lender insists on. Whether you need a pre-acquisition building report or Homebuyers report, be sure to get the correct commercial property valuation performed by a reliable commercial property surveyor.

Budget for property costs

Budget for all eventualities. As with any property, there will be costs involved, whether that’s long-term upkeep and ongoing maintenance, or unforeseen repairs and emergency fixes.

Don’t forget about parking 

Whatever the business, employees are going to have to arrive at their workplace somehow and at least some of them are going to require parking.

Renting out commercial property 

Letting documents 

When entering into a letting agreement with a client, you’ll need to obtain the correct documents and establish a clear agreement. Failure to do so could make it difficult to remove tenants later if they are in breach. The surest way to manage your property is to use a professional commercial property management company, which can offer knowledge and experience of the local market as well as legal and contractual advice.

Commercial lease 

A lease is a contractual agreement between you and your tenant. With a commercial lease, your tenant gains exclusive possession of the property for a specified period of time. Exclusive possession gives your tenant the right to exclude anyone, including the landlord, from the property for the duration of the lease. The duration of your commercial lease will need to be established before signing. When you do need to extend your lease, our expert valuers will inspect the property and provide you with a formal lease extension valuation.

A licence 

A licence gives permission for someone, i.e. the licensee, to do something on your property. The licensee does maintain access to the property and you can get it back when required.

A tenancy at will 

This is only really used for short-term agreements. A tenancy at will means the tenant can use the property but the arrangement can be interrupted by either the landlord or the tenant at any time.

Repair and maintenance obligations under a commercial lease

Tenants will usually be responsible for the “reasonable” repair and maintenance of a rented commercial property; as the landlord, you will be responsible for structural repairs to the property. Obviously, since these terms are open to interpretation, issues can and do arise, so it is important to define all terms before the tenancy commences.

Repair covers damage to a portion of the property which needs to be fixed. Tenants are responsible for any damage which they cause to your property for the duration of the lease. Maintenance, on the other hand, involves taking steps to avoid deterioration of the building and its systems. Disputes often arise over repairs being required, and whether they are due to poor maintenance on the part of the tenant or through reasonable wear and tear, which would then be the responsibility of the landlord.

Structural repairs are necessary to hold the building together, such as foundations, walls, roofs, and floor structures. Unless expressly identified, you, as the landlord, will generally be responsible for structural repairs.

Make sure your lease is well worded

The surest way to avoid any potential discrepancies is to ensure that your lease is clearly written and outlines the standards to which your property must be maintained. This should include references to industry standards for ventilation and heating systems, that equipment manuals be followed, and that tenants only use qualified technicians for any on-site work. Your lease should also prescribe specific times and frequencies at which maintenance tasks and check-ups should be conducted.

Terminating a commercial lease 

You can hopefully avoid this by conducting regular property checks and enforcing maintenance work before the situation progresses too far. Terminating your lease should be your last resort since in these cases, courts often grant tenants relief from forfeiture, and if you failed to give sufficient notice, you may even be ordered to pay your tenant’s damages.

If you find yourself stepping in to perform your tenant’s obligations and performing maintenance work on their behalf, you cannot be assured of ever recovering your money back.

What to do if your tenants don’t meet their obligations 

Many leases give tenants a period of time in which they must complete any required maintenance work. If the initial deadline is not met, you will need to issue the first notice of default, stipulating a specific time frame in which the work must be completed and that failure to do will result in you potentially terminating the lease, or taking over the tenant’s responsibility.

Commercial property agents – Perry Hill Chartered Surveyors

Whether you’re buying a commercial property to rent out or as an investment for your business, Perry Hill Chartered Surveyors have extensive experience in rental leases and agreements. Give us a call on 01483 237333 or contact us here.

Lease Extension Negotiation and Cost

Residential Lease Extension – Why You Should Extend Your Lease

Property and land registry law can often be extremely complex. If you are considering purchasing a property or already own your property, you may wish to know more about Residential Leasehold Extensions.

A Leasehold Agreement means that you own your property but the land on which your property has been built is owned by the Freeholder. This may not seem ideal, however, as long as the Lease remains valid, then you are entitled to occupy the property.

Often people may purchase a house or flat without realising that the number of years left on the Leasehold is not enough. Though not always a problem at the time, it could cause issues if you needed to suddenly sell the property.

In fact, approximately 60% of mortgage lenders won’t lend on properties with less than 75 years left on the Lease.

This is why considering a Leasehold Extension is an ideal solution for people finding themselves heading towards the end of their Lease.

Lease Extension Advice – How to Negotiate a Lease Extension

At Perry Hill, our expert residential property valuers provide concrete advice to secure the future of not just your bricks & mortar but your home and investments.

Negotiating a Leasehold Extension can sometimes be a difficult process, requiring the professional assistance of property consultants who are able to confidently negotiate Leasehold Extensions.

Our Lease Extension specialists begin the process by providing an up-to-date valuation report of the property, including detailed property surveys and inspections. This provides the foundations from which to begin negotiating the extension of the Leasehold with the Freeholder.

Perry Hill Leasehold negotiation services ensure that the Leasehold Extension is fair and representative of the current market and property valuation.

Extending My Leasehold – When is the Best Time?

Though it may seem like your Leasehold has an adequate number of years left, properties with a residential Lease of 79 years or less can often cause homeowners and their family’s issues in the future.

For example, if family members inherit a property with a 70-year Leasehold, they may struggle to sell the home and be unable to afford the upkeep of the property.

Each residential Leasehold Extension in the UK can vary in price, though extending Leaseholds can be considerably less expensive if approached before the Lease reaches the 79-year expiration mark.

The Cost of Residential Lease Extensions – Are Lease Extensions Worth It?

It’s important to cost-up the potential impact of purchasing a property with a Leasehold of 80 years or less. Financially, you may be able to afford the property with a mortgage but in several years’ time, your circumstances may not allow for a Lease Extension.

Extensions on properties with short Leases (65 years or less) are expensive. In fact, it’s these residential Lease Extensions which can often become extremely complex, making it worthwhile to instruct a professional Leasehold Extension negotiation company to assist you in securing the best price possible for extending your Leasehold. The reason these types of Leaseholds are much more expensive is because below 80 years, your Leasehold extension costs include a 50% ‘marriage value’ fee.

‘Marriage value’ refers to the extra value extending your Leasehold adds to your property.

Can I Extend my Residential Leasehold?

Most of the time houses are sold as Freehold and so it is flat owners that may require residential Leasehold Extension services. Increasingly however, new build houses are being sold with Leasehold agreements leaving residents angry at unexpected rental charges in addition to expensive mortgage payments.

Though most homeowners are able to extend their residential Lease, there are certain legal criteria to be met before doing so.

Most importantly, you must have owned the home for a minimum of 2 years. This can cause additional expenses if the two years you are required to wait means that the unexpired years on the Lease drops below 80.

Professional Leasehold Extensions from Perry Hill

The decision to extend your residential Leasehold is an important one for the future of your home and family. It is recommended to undertake residential Leasehold Extensions with the assistance of qualified professionals to ensure the outcome of the Leasehold Extension Agreement is favourable and fair for both the Leaseholder and the Freeholder.

Perry Hill Chartered Surveyors successfully help homeowners each year in extending their residential Leaseholds. Our industry-recognised surveyors save our Clients time and money by helping with the burden of negotiating complex residential Leasehold negotiations.

Find out more about Lease Extensions and contact a member of our team today to discuss your options.

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