How to rent an industrial unit in the UK?
We’ve written this guide to help you navigate the process of renting an industrial unit, from finding a suitable space all the way through to moving in.
Industrial buildings are simple, but committing to a lease involves many legal and practical considerations to ensure you end up with the right building for your business. We are here to help you find the right space for your business in an easier and faster way.
How long do I need to sign up for, and does the lease include any break options?
When looking at your lease options, it is important to discuss with your potential landlord how long you will be expected to sign up for. Check whether a break option can be selected, as this could give you flexibility to suit your business needs. At Industrials, we offer leases from 3 years to 5 years but can do longer leases if required. Learn more about our Smart Lease option.
What repairs and maintenance will I be responsible for?
Once you’ve considered the length of your lease, discuss the repairs and maintenance you will be responsible for – taking on a new space will mean taking on some new responsibilities. The two most common lease types are Fully Repairing and Insuring (FRI) and Internal Repairing and Insuring (IRI). Under an IRI lease, you are responsible for the internal repair and maintenance of the building (often including windows and doors), while with an FRI lease, you are responsible for both the internal and external of the property.
Is there a service or maintenance charge when renting an industrial unit? What does it include?
There is normally a service or maintenance charge within every commercial lease, and it is not always clear what costs will incur. Service charges cover the repair and maintenance of the common areas. The amount you will pay is unlikely to be fixed and is usually a proportion of an estate budget set annually. If you are leasing with us, we charge a Fixed Maintenance Charge on our internal repairing and insuring leases. This charge covers the maintenance of common areas and the external aspects of your unit. This will allow you to forecast your costs throughout the lease term, with a typical annual increase of 3% for this charge. At Industrials, we prioritise transparency and strive to provide clear information about all the charges you may encounter. You can find detailed information about our maintenance charges. If you have any further questions or need more details, please don’t hesitate to reach out to us. We’re here to assist you and provide any additional inquiries you may have.
Will my lease be inside or outside the Landlord & Tenant Act?
It’s up to you as a customer to make this decision. If you want to know more about what is being covered by the Landlord and Tenant Act 1954, please click here.
What utility supplies does the building have (gas, electricity, broadband, water)?
While some landlords may supply utilities like gas, electricity, and water, it is not a given, and it can be frustrating to move into a new place yet be incapable of running your business. Double-checking which utilities are included before making any commitments is always a good idea.
How quickly can I move in?
Looking for new space for you and your business is an exciting process, and you would want to get the keys as soon as possible. However, confirm with your landlord the date you can move in to minimise any disruption to your business. At Industrials, you can complete the whole process and move in 1 week after the initial enquiry.
Are there any restrictions I should know (access, use)?
You should have a clear idea of when and how you have access to your unit. However, this should be clarified when viewing the property, as some sites restrict operating hours. If you are leasing with Industrials, our units typically have 24-hour access.
What space am I renting, and does it include designated parking/yard areas?
You should already know how much space you require for your business. However, it is important to confirm whether an external yard/car parking space is included. Spaces can be demised (specific spaces will be highlighted within your lease) or allocated (spaces will be provided at the landlord’s discretion). Upon negotiating terms, make sure you confirm your requirements for internal space. Most of our units have spacious designated parking areas and communal yards, making it an ideal space to operate your business.
How much does it cost to rent an industrial unit? Will it increase in the future?
The most important thing to consider is that you can afford the rent and your monthly cost. Firstly, you need to find out the cost of renting an industrial unit and make sure it fits on your budget. Secondly, ensure there are no hidden fees or costs that you weren’t aware of. If you are looking to rent your space for the longer term, discuss with your new landlord whether a rent increase is likely in the future. If you are renting with Industrials, there will be no hidden fees throughout your lease because we offer an all-inclusive lease that already covers the IRI lease, maintenance charges, and dilapidations.
What is the total monthly cost (i.e. rent + rates + service/maintenance charge + insurance + deposit)?
Ensure you know the total monthly cost you will incur before renting a unit. At Industrials, we offer a range of additional extras, including insurance and dilapidations cover, and we can also calculate your total outlay before signing your lease. This figure can be explicitly written into your lease. This means you can sign the lease in full transparency of all costs and plan accordingly.
How much space do I need?
Don’t forget to consider the ratio of office to industrial space you require, as offices can be expensive to fit retrospectively. We have various unit sizes that are flexible for different business needs, whether for industrial works, commercial use, storage, manufacturing, or warehouse purposes. You can choose your unit size preference when finding our available units here.
How long do I need it for?
Your business will likely change over time, so you need to consider how long you can commit to the building. Longer lease commitments often result in lower rents, so think about the maximum time you can commit to get the best possible deal. At Industrials, we offer a lease term of 3 to 5 years with a simple T&C, find out more about our Smart Lease option.
What type of space do I need?
Industrial buildings vary in prominence, height, shape, and many other factors that can attract higher or lower rents. For example, if you plan to install racks, a high building will be much better value as you only pay for the area used (not the height). An odd-shaped building might be cheaper to rent but may still work well for your business. At Industrials, we offer various sizes of industrial units, making it a flexible space to meet varied business needs.
Do I need anything out of the ordinary?
Some businesses require additional floor loading or extra power capacity for heavy machinery. Others may require cranes for moving goods or high security to keep expensive stock safe. Another might require special planning or other approvals. These factors may significantly reduce the number of buildings available, but being upfront about them may save time.
What sort of access do I need?
It’s important to consider things like how many doors you’ll need, where you are going to park your cars, where you will unload deliveries, are there restricted hours for access, what about noise and smell (i.e. if you are in a residential area), or even whether there is a low bridge which may hinder large HGV deliveries. You should also think about when you are likely to have most of your vehicle movements and arrange an inspection for this time of day to check out local traffic conditions.
When do you need to move in? Some buildings are available immediately, but others may need work done first, and some may need to be built based on your specification. Plan and notify the agent or landlord of your timescales. Allow plenty of time to sort out the legal documentation and secure necessary consents. If you leave everything too late, you will find yourself in a weak negotiating position.
Most landlords will require a rent deposit. Often this is equivalent to 3-6 months of rent and will be payable at the start of the lease along with the first month or quarter’s rent.
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.
You can find a full list of rateable values on the Government website here. If your rateable value is less than £15,000 per year, you may be eligible for small business rates relief or may not be liable for paying rates at all, you can read more details here.
Most landlords charge VAT for all goods and services, including rent and service charge payments. If you’re unable to get a refund for the VAT, you should consider this as an extra cost. Even if you can reclaim VAT, it’s important to note that there might be a delay in receiving the refund, leading to a temporary cashflow shortfall.
Service or maintenance charge
Where properties have common parts, such as service yards, landscaping or security, which are the benefit of all tenants, it is common for landlords to charge a service or maintenance charge as a contribution towards their upkeep and maintenance. The structure of the charges can vary, but typically, they are either fixed or variable, with the latter meaning that the charge can differ from year to year. Find out more about the maintenance charges.
The landlord will almost always insure the building on your behalf and recharge the cost to you. However, you will also need to take out your insurance policies to cover things such as contents and public liability.
Repairs and maintenance
Depending upon what your lease says, you may be liable for internal and external repairs of your building during the term of your lease. In the worst-case scenario, this may include repairs for damage or deterioration which occurred before you moved in. Make sure you understand what you will be liable for to avoid unexpected bills.
At the end of your lease, you are usually required to return the unit ‘in good and substantial repair and condition’. This usually means no worse than when you moved in, but depending upon the condition when you took the premises, it can mean putting it into a better condition than when you took the lease. The Royal Institution of Chartered Surveyors found that the average dilapidation settlement on industrial property is £7.27/sq ft, which is likely to be more than a year of rent for most occupiers. Some landlords offer a Schedule of Conditions to help reduce this liability, while others (like Industrials) offer leases which exclude dilapidations at the end of the lease, so you can simply walk away. Read our guide to dilapidations for more information.
Waste and Utilities
Unless your landlord lets you know otherwise, you are likely to need to source your own gas, electricity, water and waste supplies. This works much like it does at home, so it’s worth getting quotes in advance.
When fitting out your premises, there are several things that attract tax relief through capital allowances, including heating, lighting, electrics, security, IT, carpets, furniture, racking, mezzanines, shelving, machinery, cranes and trade-related installations. The savings can be substantial, so it’s worth taking advice to see where you can save. Find out more about capital allowances here.
Leases are often lengthy legal documents, which means that legal fees can add up unexpectedly if you’re not ready for them. You might also need the services of a building surveyor to assess the property or an engineer to assist with your renovation plans. It’s important to keep these potential expenses in mind and plan accordingly.
You can easily browse and find an industrial unit that suits you though online. There are plenty of useful websites that offer various unit types into one place. At Industrials, we offer various types of units in prime locations across the UK, covering industrial units, warehouses,storage units, and small units. You can easily browse our available units by region, type of space, or location here.
Most commercial estate agents list their available properties on their websites. Different agents will dominate different areas, so it’s often best to take a drive around the area you want to locate your business and see which local agency has the most boards up. Most agents are paid by the landlord. Hence, while they can be a useful free resource for market information, it’s important to remember that they might not be impartial.
Direct to landlord
An increasing number of landlords now market their own space and handle their own leasing negotiations. Information can often be better in these instances as nobody knows their buildings better than the owner, but the choice is likely to be more limited.
Once you have found some potential options, it’s worth picking up the phone or getting out on the road to see the properties first-hand. A lot of marketing particulars are limited in detail, so it is important to get under the skin and ask lots of questions.
View some properties
It’s important to see a few different properties to get some perspective on what is available. It will also give you an opportunity to quiz the owner or letting agent on some of the finer details, and get a feel for what kind of landlord they might be. Take lots of photos to help remember the important things like what utilities are available, or for future space planning and fit-out.
Get some proposals
There is often a difference between the quoting rent and the actual rent that can be agreed upon. Ask for a proposal you can consider and make sure it covers all the key cost areas. It’s a good idea to request a proposal that you can carefully review and ensure includes all the important cost factors. This will help you understand the complete picture before making a decision.
Read between the lines
How your prospective landlord behaves leading up to the letting can be a good guide to your future relationship with them. Are they responsive? Is the building well looked after? Do they speak to you directly or always communicate via a third party? A bad leasing experience can be an early warning sign for a troubled future relationship. It’s always worth speaking to other tenants at the property to see what they think of the landlord or the buildings.
Ask the right questions
You will need to agree with your landlord on several key aspects as part of a lease. Key ones to consider include:
- How long is the lease?
- Does the lease include any break options?
- What is the notice period to terminate the lease?
- Am I liable for external repairs and maintenance?
- What does the service/maintenance charge include?
- How much has it been in previous years?
- What restrictions are there on sub-lettings, assignments, alterations, use or access?
- In what condition will I need to return the property at the end of the lease?
- Is my lease inside or outside the protections of the Landlord & Tenant Act 1954? How often do I pay my rent, and will it increase in future?
- When can I move in?
- Can I store things outside my unit?
- Do I have designated parking or yard areas?
- Who pays for utilities and waste disposal?
- Will the landlord provide lighting or heating equipment?
- What work will the landlord undertake prior to me moving in?
You can negotiate your rent price if the landlord offers a non-quoting rent. Non-quoting rent is when the price for renting an industrial unit is not openly advertised or publicly stated. Instead, you would need to contact the landlord or the agents directly to find out how much the rent is. This allows more privacy and flexibility in negotiations.
Additionally, an ordinary letting has many areas for negotiation besides the rent and lease terms. Depending on how good the initial deal you have struck is, there may be other areas you can improve upon. Consider seeking additional certainty on variable costs and unknowns such as market rent reviews, dilapidations or maintenance charges, or add flexibility such as lease breaks or options to renew at the lease end.
Agreeing Heads of Terms (HOTs)
The Heads of Terms (HOTs) should include all the important information about your lease and cover everything you have agreed upon. Anything left out runs the risk of not being included in your lease, which means you can’t count on it in the future. If the landlord or their representative has made any promises or commitments before or during the lease negotiation, it’s crucial to ensure that these are clearly stated in the HOTs. Remember that verbal promises are usually not legally binding, especially if the landlord changes in the future and you end up dealing with a different person altogether.
You may or may not need to instruct a solicitor to help you, depending on the complexity of the agreement you are signing. However, always take professional advice if in doubt. Once your lease is signed you can’t change it, and a court is likely to enforce the content regardless of whether you understood what you were signing up for.
Now is the time to dot the i’s and cross the t’s on the building. The landlord should be able to answer any reasonable queries you may have about the property, provide a copy of the Energy Performance Certificate (which, by law, must be E or higher) or provide proof that they are the owner and are able to let it to you.
Completing “Know Your Customer” checks
At this stage you may be asked to provide information to confirm your identity, such as a passport, utility bill, or company financials.
Setting up Direct Debits or standing orders
Some landlords require the rent to be paid by direct debit or standing order. Very few landlords accept payment in cash. If you have a new business, you will need bank accounts set up and ready to go. At Industrials, your rent is paid directly to us by BACS or direct debit.
Before the lease completes you will need to transfer any advance rent or rent deposits which are payable. If the landlord is not reputable, it may be prudent to transfer these to a lawyer registered with the Law Society to give you protection if the lease is not completed.
The lease or licence will need to be signed before you can move in, as will any other documents relating to it, such as plans, schedules of conditions, or licences for alterations. Make sure your signatories are available when you need them.
Once all the above is done, you will receive confirmation that the lease has been completed. You should then receive the keys for your new property and can get back to doing the day job!
What should the landlord provide?
The landlord will typically ensure that the building is insured, and so any claims relating to building insurance will be conducted through them or their broker. They should send you the new insurance policy each year when it is reviewed and will usually invoice you for the cost of this each year in advance.
If you have a service or maintenance charge, the landlord will take care of managing it and ensuring the upkeep of common areas. The charge may also cover expenses related to security systems or other specified services. If the charge is subject to change, you should receive an annual statement indicating the amount spent throughout the year. This statement will help you determine if there are any additional payments you need to make or if you are entitled to a refund. It ensures transparency and clarity regarding the service or maintenance charge.
What am I responsible for?
You will usually be responsible for sourcing your own contents insurance, public liability insurance and other regulatory requirements like health & safety, asbestos, etc. You are also likely to be responsible for engaging your own utility suppliers and for paying your business rates.
Depending upon the terms of your lease you are likely to be responsible for internal maintenance and repairs and, potentially, also external maintenance and repairs, if you have a ‘Full Repairing and Insuring’ (FRI) lease. This includes anything which goes wrong from the moment you have completed your lease, such as roof leaks or boiler breakdowns. It is important that you understand the repairing obligations in your lease, so you don’t pay for items unnecessarily or get any nasty surprises later. At Industrials, we offer an all-inclusive lease which includes external maintenance, insurance, and rent. Find out more about our Smart Lease option.
What do I do when I want to leave?
To end your lease you will need to exercise a break option or leave upon lease expiry. Exercising a break option usually requires serving notice upon the landlord in a certain timeframe and may be subject to several conditions, so plan this well in advance. Typically, it is not required to give notice when leaving at the end of your lease, but it can be considerate and practical to do so. When preparing to leave, it’s important to consider your obligations for repairs and whether you’ll need to address any dilapidations with the landlord. Additionally, don’t forget to terminate any other services you may have, such as utilities, waste management, or cleaning contracts. Taking care of these details will help ensure a smooth departure process.
What if I can’t pay my rent?
In such situations, it’s always best to speak to your landlord before the rent payment is due if you’re worried about making the payment. Falling to pay your rent puts you at risk of lease termination and eviction. Additionally, the landlord may involve bailiffs, which can be distressing for your staff and lead to extra charges. By discussing your concerns with the landlord, they might be willing to consider adjusting payment terms or providing a payment plan, which could alleviate short-term cash flow challenges.
What if I need more or less space?
Some landlords will be willing to move you into larger or smaller spaces during your lease, but others may not be able to accommodate or consider this. It’s important that your lease gives you the flexibility you need to grow your business because it would be much harder to change once it’s signed. If you have concerns about the size of your premises, it is always advisable to speak to your landlord in the first instance to see what they may be able to do to help.
Our Smart Lease
Our Smart Lease makes it easy for you to rent an industrial unit as we have simplified the legal process and sped up the leasing journey. With just one simple contract and straightforward terms, you can rent a perfect industrial unit in one week. Managing cash flows is also made effortless with our transparent letting process – fixed rent prices, no hidden costs, and all external maintenance costs are fixed for the term of your lease.
With the Smart Lease, you can also benefit from these:
- 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
Find out more about our leasing options by clicking the button below. If you have any questions about the terms we offer, want to inspect a unit, or simply want to discuss the process of taking a lease, then call us on 0800 011 9237 or email us – we’d be delighted to hear from you.