Commercial estate agents rental percentage

[srebbe64]

Because of Covid, like many other companies, we’ve laid off some staff, while other staff are working from home. We own two buildings and now we can fit everyone in the larger of the two. As such, I’m looking at renting out the smaller building. I asked a commercial estate agent to give me a quote and was surprised to see a 10% commission on the rent. Is this the going rate?

[FazerBoy]

Yes.

[surveyor]

Absoloutly.

[rfisher]

Plus VAT presumably?

[FazerBoy]

Yes

[singlecoil]

A sign outside the premises might be just as good. You will need to pay legal fees whether you have an EA or not (in the olden days landlords used to be able to get the incoming tenants to pay the landlord's fees as well as their own).

[Noel]

You can of course put a sign up outside but if you don't understand the 1954 L&T Act how will you agree terms that protect your asset?

Pay the 10% for a chartered surveyor to do the job right. Saving a few quid today could come back to bite you.

[singlecoil]

Noel said:

You can of course put a sign up outside but if you don't understand the 1954 L&T Act how will you agree terms that protect your asset?

Pay the 10% for a chartered surveyor to do the job right. Saving a few quid today could come back to bite you.

By using a specialist commercial solicitor?

[FazerBoy]

singlecoil said:

By using a specialist commercial solicitor?

Not really. The solicitor might then have to unpick some of the terms already agreed (albeit subject to contract) by the parties. It can start to get messy.

I am an asset manager for a large commercial landlord and my advice would generally be to use a commercial letting agent.

[singlecoil]

FazerBoy said:

singlecoil said:

By using a specialist commercial solicitor?

Not really. The solicitor might then have to unpick some of the terms already agreed (albeit subject to contract) by the parties. It can start to get messy.

How so?

[Noel]

The solicitor will understand the 54 act but they won't know the right level of rent or incentive.

The solicitor is also going to charge more if the lease drafting takes longer.

I am an agent with over 20 years experience so you may feel I'm biased, and you're probably right. But I have seen so many badly drafted leases done on the cheap that I strongly advise spending a bit more now to avoid cost and problems in the future.

[FazerBoy]

singlecoil said:

How so?

Because a landlord without thorough knowledge of the Landlord & Tenant Act 1954 might agree terms with a tenant which his solicitor might deem not be be in his best interests...

[singlecoil]

Pretty daft landlord who would agree anything with anybody without discussing it with his specialist commercial solicitor first. I had assumed the OP was not daft

[Chrisgr31]

A good commercial property solicitor will not attempt to do the surveyor job, just as the surveyor will not attempt to do the lawyer job.

Relatively innocuous looking terms in a lease can have a significant impact on the rental value both up and down. It never fails to amaze me that people dont take advice on commercial rent deals.

[singlecoil]

Chrisgr31 said:

A good commercial property solicitor will not attempt to do the surveyor job, just as the surveyor will not attempt to do the lawyer job.

What exactly is the 'surveyor job' in the scenario described, where a willing landlord has found his own willing tenant? None of the surveyors have actually said.

Chrisgr31 said:

Relatively innocuous looking terms in a lease can have a significant impact on the rental value both up and down. It never fails to amaze me that people don't take advice on commercial rent deals.

It doesn't surprise me in the slightest, reason being that the surveyors haven't shown value. They may well have value, their value may well easily exceed their cost. But it's up to anyone who hopes to sell a product or service to show the value. Not tell, it's no good saying "I'm worth it", they have to show it.

In my line of work I provide a product and a service. What I provide is worth more than the apparent equivalent from my competitors, but my saying so doesn't sell it, I have to show it. And if I can't show it I don't get the sale. Even if I can show it, if the value I've shown isn't worth the extra money (to them) then I don't get the sale.

[Chrisgr31]

The surveyor will know the local market, what rents are being paid locally, what the impact on rent of a shorter or longer term is, what the value of any break clause is, what provisions the lease should make for the end of the term, what the impact of the wording of any rent review clause is on the rent, what the impact of the 1954 Act is on the rent etc.

In the ideal world both parties should be represented so they go in to the agreement well informed. Willing tenants or willing landlords have this habit of becoming unwilling a few years down the line when they discover the deal they did wasnt as good as they thought it was.

[Dixy]

Or you could do it all yourself and stop either set of greedy parasites from getting their snouts in the trough. No matter how much you pay them they will primarily look out for themselves and when it goes tits up will wriggle and squeal.

[surveyor]

singlecoil said:

Chrisgr31 said:

A good commercial property solicitor will not attempt to do the surveyor job, just as the surveyor will not attempt to do the lawyer job.

What exactly is the 'surveyor job' in the scenario described, where a willing landlord has found his own willing tenant? None of the surveyors have actually said.

You seem to have made something up here. Nowhere does the op say he has a tenant.

As for selling our services - we are giving factual information and not selling anything on this post

Dixy said:

Or you could do it all yourself and stop either set of greedy parasites from getting their snouts in the trough. No matter how much you pay them they will primarily look out for themselves and when it goes tits up will wriggle and squeal.

No one is forcing the op to use an agent. I’d recommend it and that is no surprise, although it makes no difference to me either way.

Edited by surveyor on Saturday 24th October 13:46

[singlecoil]

surveyor said:

singlecoil said:

Chrisgr31 said:

A good commercial property solicitor will not attempt to do the surveyor job, just as the surveyor will not attempt to do the lawyer job.

What exactly is the 'surveyor job' in the scenario described, where a willing landlord has found his own willing tenant? None of the surveyors have actually said.

You seem to have made something up here. Nowhere does the op say he has a tenant.

As for selling our services - we are giving factual information and not selling anything on this post

I should have made it clearer that I was referring to a situation where the landlord had found, through his own efforts, a tenant who had viewed the premises and was happy to pay the asking rent for a lease of a length they were both happy with. A hypothetical situation ('made up' if you prefer) but one that could easily happen and frequently does, in fact it happened to me only last year.

[surveyor]

singlecoil said:

surveyor said:

singlecoil said:

Chrisgr31 said:

A good commercial property solicitor will not attempt to do the surveyor job, just as the surveyor will not attempt to do the lawyer job.

What exactly is the 'surveyor job' in the scenario described, where a willing landlord has found his own willing tenant? None of the surveyors have actually said.

You seem to have made something up here. Nowhere does the op say he has a tenant.

As for selling our services - we are giving factual information and not selling anything on this post

I should have made it clearer that I was referring to a situation where the landlord had found, through his own efforts, a tenant who had viewed the premises and was happy to pay the asking rent for a lease of a length they were both happy with. A hypothetical situation ('made up' if you prefer) but one that could easily happen and frequently does, in fact it happened to me only last year.

I still see potential value to having some advice in our hypothetical situation. Mainly regarding whether you are potentially achieving the best rent. How bothered you are is your own decision.

I also see some value in terms of advice regarding the general terms, but a solicitor should normally be able to cover that (assuming that they are capes of giving commercial advice).

But in any case, this does not seem to be the op’s position.