Whether you are looking for a new office, shop, warehouse or hotel, finding the right commercial property is crucial to your business’s success. The first thing to decide is whether you want to buy or rent property – a decision that rests on the type of business you own, and your plans for its future.
Most businesses in London choose to rent commercial property rather than commit to buying it, as it ties up less capital than buying property and gives you more freedom to relocate. There may be circumstances where you want to consider buying premises for your business – please see our Buying Commercial Property in London Guide for more information.
For businesses looking to rent commercial property in London, this guide outlines a few of the things you should consider before you commit to a commercial rental property. It should also introduce you to the variety of procedures you should consider when renting a property, from choosing the right type of property for your business to terminating the lease at the end.
Alex Crown Commercial property agents in London have a range of commercial spaces to rent in London, so please browse our London properties to rent for the perfect space for your business. Or if you have any questions or need advice, our team of experts will be happy to chat to you about your commercial property requirements, so please call, email or visit our Islington office.
Renting Commercial Property in London – Advantages and Disadvantages
Before you start looking for a commercial space London, it is important to consider whether renting is the best option for you, or whether you should look for commercial property to buy.
Advantages to renting commercial property in London:
• Flexibility – not being locked into owning a property, you have more freedom. So if your business grows in size or you want to relocate, as soon as your lease runs out, you can move
• Finance – renting commercial property ties up less capital than buying business property, freeing up money you can use elsewhere in your business
• Interest Rates – though your rent may rise when it is reviewed, you are not exposed to rises in interest rates
• Safety – renting commercial property means you are less likely to have unexpected financial shocks, and falls in property value do not affect you
• Less Responsibility – you will not be as responsible for building you rent, as many of the repairs and maintenance duties will fall to the landlord
• Negotiation – you or your agent will be able to negotiate all terms of the lease with the landlord before you sign the business lease.
Disadvantages to renting your own commercial property:
• Rental Increases – when the lease is reviewed, your landlord has the power to put up the rent
• Property Ladder – if the commercial property you rent gains in value, you will not be the one to benefit
• Multi-Occupancy – if you are in a multi-occupancy office, you cannot predict who will share the building with you. Also, if you want to rent a shop, you may not be able to also rent the space above it
• Service charge – renting commercial property means you may have to pay a service charge.
Generally, for the first five years of occupancy, renting commercial property works out far cheaper than buying commercial property. It then becomes about equal for the next five years and becomes more expensive from then on. If you are looking for business premises to occupy for far longer than ten years, you may wish to consider buying commercial property. Anyone else should consider renting.
Choosing the Right London Commercial Property to Rent
Commercial rental property may be subdivided into four main sectors:
• Retail – shops, warehouses, supermarkets, shopping complexes etc
• Offices – multi-occupancy office blocks, standard offices, business centres etc
• Leisure – public houses, restaurants, hotels etc
• Industrial – warehouses, industrial units, land etc.
Which type of commercial property you choose to rent in London depends on the needs of your business. A few factors you may wish to consider before deciding which commercial property to rent in London include:
• Facilities – for examples: some industrial units may not have all the electrics you require, whilst offices in Central London may lack parking
• Impressions – anyone dealing with clients and customers should consider what impression the property you wish to rent gives
• Productivity – though a certain building may be cheaper to rent, it may not be so comfortable and productive for your staff, so will cost more to your business in the longer term
• Space – for example: if you require a large amount for storing goods, a warehouse may be the best option for you
• Legal Requirements – whether the property meets health and safety and fire requirements.
Most rental property in London has two main holds: freehold and leasehold. Freehold is not limited by time, whereas leasehold is, though often leasehold interests are just about perpetual (long leases can be granted for 999 years). The flats and property in London tend to be leaseholds.
If you are in any way unsure about which type of property would be best suited to your business, our friendly staff at Alex Crown Commercial can help. So whether you’d be suited to a shop, office, warehouse or plot of land, our team can let you know about all the properties on the London market that fit your requirements.
Choosing the Right London Location to Rent Commercial Property
When looking for commercial property to rent in London, it is extremely important to choose a building in the best location for your business. Which part of London this is depends on your business’s individual needs. Some points to consider:
• Customers – if you business is in retail, you should choose a premises that customers can get to easily, where you can also attract passing trade
• Office Space – if your business is in high tech communications, you may wish to opt for a building outside the City centre, to get more office space for your money
• Transport Links – if you produce goods, you may need to be on the outskirts of London, to have good access to the motorway
• Commuting – any business with staff and clients should consider whether the building they move to is easily accessible
• Branding – if you will have clients coming to your business, you may also wish to consider whether the building gives the right impression for your business
• Employees – new businesses may wish to consider moving to a location in Central London to have a greater range of potential employees to choose from
• Parking / Delivery Restrictions – if you will need to take or deliver goods, check whether your business premises have the right facilities. You may also wish to check the nearby congestion charges
• Local Amenities – for clients and staff, who may need to use local supermarkets and restaurants
• Planning Restrictions – if you are planning to alter or expand the premises, you may wish to see if there are planning restrictions that will prevent you.
• Flats in London are generally held on a leasehold basis.
Alex Crown Commercial can help you to find the perfect commercial property in the right London location for your business. Please browse our huge selection of property to rent in all areas of London, or drop us a line if you have any further questions and our experienced staff will be happy to assist you. Whatever commercial property you are looking for, we can help you to find one in the most suitable location for your business.
Types of Commercial Property Rental Agreements in London
London commercial property can be rented for as little or a long as you require. If you are looking to rent commercial property for very short term (for example, to complete an order), you should opt for a short term lease; if you are searching for commercial property to rent in London for longer than three years, a long term lease is more suited to you.
• Long Term Lease Agreement: Typically between three and 25 years, and suitable for all types of property, where the landlord or tenant is one person or company. Can be used on whole buildings, part of buildings or units on a site. If the commercial property is part of a building, the Landlord undertakes to repair and maintain the structure and exterior of the building – the Tenant contributes to the costs of such maintenance by means of a service charge. This lease is not suitable for charities.
• Short Term Lease Agreement: Typically between a few months to three years in all types of property, and can be used for whole buildings, parts of buildings and estate units. The Landlord is obliged to repair the property, the Tenant’s obligations are limited and there is no service charge. The Landlord is not obliged to insure the property. Includes the option for a ‘break clause’, which means either party may terminate the lease from a given date.
Alex Crown Commercial can help you to negotiate with your landlord how long your lease should be and what type of contract you have.
As well as lease length, in the contract, you should consider:
• Break Clauses – check whether you or the Landlord can terminate the lease at a given date
• Service Charges – check how much these are and what services they will cover (can include cleaning, security, heating etc). You may be able to challenge such service charges
• Dilapidations – check whether there is an amount that is payable to the landlord at the end of the lease
• Rent Deposit – check how much is required, and if any rent is required in advance
• Maintenance – check who is responsible for the building and external areas maintenance and repair, whether you or the Landlord.
Practicalities of Renting London Commercial Property
Alex Crown Commercial can advise you on different aspects of renting London commercial property, but a few things you may wish to consider first include:
• Planning Permission – if you are planning to make changes to property, ensure you have the planning permission you need
• Delivery / Loading – find out if there are any restrictions that may affect your business
• Restrictions – depending on your business, there may be certain parking, rubbish disposal, noise or lighting restrictions on the building that may affect you.
Before renting a London commercial property, some other things to consider include:
• Land Registration – all new leases, with seven years or more left to run, must be registered with the Land Registry. To register, you will normally be required to submit a scale plan of the premises, the premises full address and postcode and a location map
• Insurance – depending on your lease, either the Landlord or you will need to arrange insurance for the premises. If the Landlord provides the building insurance, you may need to pay the premiums as part of the service charge, and you may need to take out content insurance yourself
• Guarantors – normally, a Landlord will request references, to confirm you will be able to pay your rent
• Energy Performance Certificates – your Landlord should provide you with one of these, which will give you a good indication how much your utility bills will be, and how energy efficient your new property is.
As well as utility bills, renting commercial property in London has a variety of costs, which include:
• Utility Bills
• Service Charges
• Stamp Duty
• Business Rates
• A Deposit (typically about six months’ rent).
Renting London Property
So you’ve found the perfect property, what next? As a tenant, there are a few responsibilities that fall to you, though Landlords and managing agents may share these responsibilities. Make sure you check your lease, as some responsibilities lie with the tenant, and include:
• Maintaining the Premises – though you may share these responsibilities with the landlord
• Health and Safety – includes keeping the property waste free, at a suitable temperature, and providing sanitation and washing facilities
• Assessment Risks – you must meet minimum workplace standards
• Gas Safety – gas appliances must be maintained (though the upkeep may fall to your Landlord)
• Fire Safety – includes measures to prevent fires and training staff in fire training
• Electrical Safety – you are likely to need to take care of wiring systems and electrical equipment.
If you want to make any alterations to the interior of the property, or very small changes to the outside, you may not need planning permission, but should check with your Landlord what they allow. Planning permission is generally required if you wish to make changes to the outside of the property, and if you have renovation plans for the building, you may wish to check with your local planning authority before you sign a lease. Before you start work, also check the lease to see whether you will need to return the property to its original condition, before you move out.
Reviewing Your Rent and Ending the London Commercial Property Rental
Before you start renting a London property, you will have agreed the amount of rent you pay with the landlord. This is normally paid on a monthly or quarterly basis, and if you fail to pay, the landlord may be forced to terminate the tenancy and take action to recoup the debt.
If your lease includes ‘Rent Reviews’, which may alter the amount of rent you pay, these often occur every three or five years. If neither Tenant nor Landlord can agree to a new rent review, an independent professional may be brought in to settle it.
If you want to vacate the premises before your lease runs out, check your lease, as it may allow you to sublet the property – staying as tenant but subleasing to another tenant, so long as you get permission from your Landlord.
For a commercial property to rent in London, please browse Alex Crown Commercial property agent’s variety of commercial property. Whether you want to rent office space, a shop or an industrial unit, we are sure to have the right commercial property for you. Or for more information, please give us a ring or come into our office at 708 Holloway Road, Islington, London N19, and our staff will be happy to assist you.