TENANTS GUIDE: HOW TO MAKE AN OFFER

Wednesday 22 August 2018

 

You have found a property to rent. So what happens next?

 

Once you have identified a suitable office, retail or industrial premises for your company, you will be required to make a formal offer - we have prepared a useful guide for Tenants on how to make an offer - the information provided below is offered for guidance purposes and Tenants should always seek independent professional advice from their advisors (solicitors, surveyors etc) before entering into a lease. 

 

All offers should be made 'SUBJECT TO CONTRACT' ensuring that there is no legal commitment to any proposal at this point.

 

LEASE TERMS:

The following items MUST be considered when making an offer to lease a unit / building.

Please note that when a property is being offered as a 'Lease Assignment' (ie existing lease) the lease terms are already fixed and therefore not negotiable.

 

RENT:

Please quote the proposed rent per annum exclusive (pax) - the yearly rent is usually exclusive of business rates, service charge, VAT etc.

Rent will usually be paid quarterly (3 monthly) in advance and in many cases VAT will be payable on the rent.

 

LEASE TERM:

Please state the number of years of the lease - For example a 3, 5 or 10-year lease.

Leases are often 'contracted out' of the security of tenure and compensation provisions of the landlord & Tenant Act 1954. If this is the case, the Tenant will be required to sign a Statutory Declaration in the presence of a solicitor. 

 

BREAK CLAUSE:

If you wish to include a break clause (to determine the lease at a given period during the term) in which case, please suggest when you wish this to be effective and how much notice you are prepared to offer.

The landlord may require a minimum term of before a beak clause is acceptable, a reasonable notice period and in some cases a penalty payment if a break clause is implemented.

Sometimes the Landlord may also require a break clause, but this will usually be made clear during the process of the negotiations.

 

RENT FREE PERIOD:

The Landlord may be prepared to grant a period of rent free at the beginning of the lease term, where the Tenant is required to carry out improvements / repairs of the condition of the lease.

 

USE CONSENT:

Please state the proposed use (for example; Office, Retail, Industrial etc.)

 

REPAIR:

Most commercial leases are granted as Full Repairing and Insuring Leases (FRI)

This means that you the Tenant will be responsible for all repairs and insurance of the building, or a due proportion where the premises forms part of a larger building, usually collected by the Landlord in advance by way of service charge. 

 

We advice Tenants to take advice from a qualified surveyor regarding the condition of the property.

 

THE LANDLORD WILL REQUIRE THE FOLLOWING INFORMATION:

Along with your commercial offer, you will need to submit the following information:

 

APPLICANT / COMPANY INFORMATION:

  • Full name and address of the person (s) and or company who intend to take the lease.
  • Registered company address
  • Detailed description of the business which will operate from the premises. 
  • Full Company accounts for the last three years.
  • Solicitor details.

 

REFERENCES:

In some cases, the Landlords may undertake an online credit check before agreeing terms and / or may request the following references:

  • Accountant details 
  • Current / previous Landlords 
  • Bank details 
  • Trade references 

 

SURETY DEPOSIT:

Most Landlords will require the Tenant to put up a surety deposit - this usually is for a minimum amount if three months rent plus amount equivalent to VAT,but in some circumstances the Landlord may require a higher deposit, particularly if the Tenant cannot provide.

 

Please note the more information you can provide 'up front', the more likely the Landlord will consider your offer seriously and promptly. 

 

SOLICITORS:

Due to the complexity of formal lease agreements, we recommend that you retain a suitably qualified solicitor to advise you. 

 

To discuss in further detail, please contact Houston Lawrence.

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