Guide to renting commercial property
Looking for commercial property for rent? No matter if you are a first-timer or someone experienced with managing business properties, renting a business premise is a big commitment. In this article, we will take you through the process of renting a business space, from property hunting to signing the contract.
We’ve listed the five major steps and all the questions you should consider when making the decision.
1. Find a commercial property that suits your needs
2. Understand what costs are involved in renting a commercial property
3. Make sure the commercial lease agreement fits your business needs
4. Ask essential questions to understand your rights and responsibilities
5. Sign the contract and seal the deal
Not sure where to start? Find out more information about renting commercial property below or explore our range of estates and spaces all over the UK by clicking the button below.
1. What kind of commercial property suits your needs?
Find a suitable commercial property for rent
It’s important to choose the right kind of space when you’re renting a commercial property. Are you going to need a warehouse for storing products, an office space or an industrial unit for manufacturing? Make sure you know what you’re after before continuing with your search.
Not sure about what property type is for you? We got you covered – the pages below contain information on the different unit uses:
Location, location location
When it comes to renting a commercial property, the location of the space is as important as the property type. Be sure to research the areas you’re interested in beforehand.By understanding your business’ specific needs and conducting thorough research, you can make sure that your chosen location aligns with your business goals. There are a few things to keep in mind:
- a high footfall for restaurants cafes, and shops,
- good transport links for distribution warehouses,
- convenient commutes for office spaces.
So, take your time, explore your options, and make an informed decision that sets your business on the right path.
Extra points to consider
When you’ve narrowed down your search, you should also make sure to consider the following:
- Transport links to nearby towns or cities
- Congestion charges
- Available parking space
- Loading & delivery facilities
- Overall impression of the estate or area
- Proximity of useful services, such as banks, post offices etc.
- Local amenities, like cafés and shops for staff
- Internet speeds
It may also be a good idea to conduct a local search by checking the local council’s website to see if there are any plans that may impact your business. This will show you the area’s planning and building regulations, road maintenance and other matters.
2. What costs are involved in renting a commercial property?
When it comes to leasing a space for your business, there are various different costs you’ll need to factor into your decision. Firstly, you can research the rent in the area you’re interested in. Beside that, we’ve listed ten factors that you should take into consideration when you’re calculating the overall costs of a property.
The Government charges all commercial tenants’ business rates on properties they rent (think of it as Council Tax for commercial property). They are typically around 50% of the rent charged. A full list of rateable values can be found here.
Most commercial landlords charge VAT on any rent and service charge payable. This means you need to find an additional 20% in the short term until you can claim it back.
In addition to landlords’ building insurance which is normally charged on top of the rent, tenants ordinarily also need to pay for a whole host of other types of cover, such as contents insurance, public liability insurance and directors & officers insurance. It can add up, especially if there have been historic claims on the building for issues such as flooding or subsidence.
Most landlords will require a rent deposit, which often is equivalent to 3-6 months of rent. This will be payable at the start of the lease along with the first month or quarter’s rent.
Most landlords insist on a long ‘legalese’ lease to be signed. Often this requires a lawyer to get involved, the cost of which can quickly escalate if negotiations are protracted.
Many multi-tenanted buildings have service charges in place for general building maintenance. However, these are often highly variable and can cover doing repairs to rectify issues which occurred before you moved in. It’s important to check what you may be liable for and when. Read more about the different costs in our blog.
Stamp Duty Land Tax
Even if you’re renting a commercial property, this is something you’ll need to consider. It’s a government tax on the purchase of land and properties with values over a certain amount – this may be factored into your rent. This will be dependent on the lease terms.
Local land authority charges
These are financial charges or restrictions imposed by public authorities. You can check the local land charges register of the area’s local authority to see if this would affect you.
Don’t forget to think about the costs of relocating your business, such as moving your equipment.
In some cases, you can claim capital allowances on things you’ve bought to use in your business (e.g. transportation vehicle). Take a look at our capital allowances guide for tenants for more information.
With Industrials, we’re fully transparent when it comes to the costs associated with leasing a business space – you can find a breakdown of costs directly on the website so there are no surprises nor hidden costs!
3. What should be included in a commercial lease agreement?
To rent commercial property, you’ll need to sign a lease agreement. The lease will be the legal-binding contract that states the right for the tenant to use the property for a business or other commercial activity for a specific time period.
Before signing the contract, make sure you and your landlord both agree on:
- Lease length (including break clauses)
- How you’ll pay your rent & bills
- Rent and rent-free periods
- How often your rent will be reviewed
- Maintenance & service charges
- Your responsibilities as the tenant
- Renewal terms
Choose a leasing agreement that fits your business needs
With Industrials, our Smart Lease streamlines the legal aspect of securing commercial properties for rent, offering a simple and fast process with straightforward terms. The lease is built to take away the pain of dealing with legal jargon and improve transparency between landlord and tenant. Compared to a traditional lease, this option is more flexible and adapts to your needs without the complicated process of rearranging the contract.
Here are the benefits of Smart Lease
- clear and simple T&C’s
- it can be completed online
- lease duration ranges from 1 year to 5 years
- no legal fees required
- all inclusive costs (maintenance charge, insurance and dilapidation cover)
- lease a unit in 1 week
4. Questions to ask when renting a commercial property
After agreeing to the lease, keep in mind that there are still a few questions to ask before making your final decision. It’s always good to understand your rights and responsibilities if there’s an unwanted scenario, such as property damage.
Can I access the property out of hours?
A lot of buildings have restrictive access hours. That can be fine, but it isn’t always convenient. It’s worth checking whether you can get in on the weekend, just in case you leave your passport in the office before you go on holiday.
What are my repair obligations as a tenant?
There are a number of different types of leases, but most require the tenant to keep the building in fair repair and condition. This often means repairing the roof if it leaks, or even fixing structural defects. It usually also means that the building will need to be put back into good condition when you come to leave (see ‘Dilapidations’ below). Make sure you’re aware of the condition of the property before moving in; it may be worth carrying out a building survey before signing a lease. It is also worth setting up a Schedule of Conditions Report to show the landlord the condition of the space before you occupy it.
Our Smart Lease is inclusive of all external repairs, maintenance, and dilapidations, giving you peace of mind.
What is the agreement on dilapidations?
The majority of commercial leases require the tenant to put the building back into good condition when they leave. These can be very expensive and, in some instances, involve putting the building in better condition than when the lease was signed. See our separate blog on dilapidations here.
5. Sign the contract and seal the deal
Once you’ve secured the payment and you have thoroughly assessed the property’s condition and contract terms, it’s time to exchange contracts. This is the moment that your commercial property deal is official!
For more in-depth information on how we approach renting a commercial property, check out our Leasing option page that covers all your leasing questions. Or you can call us on 0800 122 3330 to discuss your requirements further.
Ready to find your ideal business space? Browse our range of high-quality units.
Renting commercial property FAQs
What is a commercial property?
A commercial property refers to any real estate or property that is used for business or commercial purposes. It is typically distinguished from residential properties, which are used for housing purposes. Commercial properties are intended for activities such as retail, office space, industrial use, hospitality, healthcare, or any other commercial ventures.
The lease terms and conditions for commercial properties often differ from residential leases due to the specific needs and requirements of businesses.
How do I find commercial properties to rent?
There are a number of useful websites you can use to find commercial property for rent, such as realla.co.uk – you can also start with our unit search tool to see our available spaces. Alternatively, you can go to a local or national commercial letting agent who will help you find a space. Larger companies tend to be better suited to finding higher-value properties, whereas local agents will often deal more with smaller spaces.
You can also try going directly to landlords who are marketing their own commercial units and managing their own leasing options. They will know their buildings the best, so you may find you receive more relevant and detailed information from them.
Do I need a solicitor to rent a commercial property?
Technically, no. While there is no legal requirement to have a solicitor when renting a commercial property, it is recommended to seek professional advice from a solicitor. Renting a commercial property involves legal and financial considerations, and having a solicitor can help protect your interests and ensure that the lease agreement is fair and favourable to you as the tenant. The solicitor can provide you with professional guidance on negotiating support and lease modifications to make sure the lease agreement aligns with your business needs.
How do I know if my commercial property deposit is protected?
We will hold the deposit for the duration of your lease. Once you vacate it will be returned to you (less any money you still owe us as per the terms of your lease).
Are there any legal requirements or permits I need to obtain before renting a commercial property?
It depends on the lease. The legal requirements and permits for renting a commercial property can vary depending on several factors such as the location of the property, the type of business you plan to operate, and local regulations.
If you have more questions on renting commercial property, check out our FAQ page to find out more about insurance, rent, deposit and more. Contact us for further questions.