Full repairing and insuring lease
Discussion
Morning PH,
I am hoping somebody with experience can offer some constructive advice for me please.
We are in the early stages of looking for additional premises to expand our small manufacturing business & found the perfect unit.
Details: 4000ish sq ft, decent office, tea room, clean, tidy etc etc.
The rent is a decent lump but affordable, there's an additional service charge for maintenance of the communal areas - all ok.
We have not seen the lease yet but it's through an agent & mentions FRI.
Alarm bells !!! I guess this means we have to pay for a survey & ensure the FRI part of the lease is only to maintian the unit to it's existing condition. My worry is that is could have roof leaks, foundation issues or even dodgy electrics & we would be responsible.
Any ideas of cost of a survey / chances of "negotiating" the FRI / or walk away ?
A good scheme is this FRI (for the landlord !!)
cheers all, have a godd Monday
I am hoping somebody with experience can offer some constructive advice for me please.
We are in the early stages of looking for additional premises to expand our small manufacturing business & found the perfect unit.
Details: 4000ish sq ft, decent office, tea room, clean, tidy etc etc.
The rent is a decent lump but affordable, there's an additional service charge for maintenance of the communal areas - all ok.
We have not seen the lease yet but it's through an agent & mentions FRI.
Alarm bells !!! I guess this means we have to pay for a survey & ensure the FRI part of the lease is only to maintian the unit to it's existing condition. My worry is that is could have roof leaks, foundation issues or even dodgy electrics & we would be responsible.
Any ideas of cost of a survey / chances of "negotiating" the FRI / or walk away ?
A good scheme is this FRI (for the landlord !!)
cheers all, have a godd Monday
Very common to have a fully repairing and insuring lease on commercial properties, you probably should get the lease looked at by a professional, if you proceed you would almost certainly have to anyway, There’s a reason freehold commercial property is rare, people hang onto it , if you can buy a unit that’s the way to go IMHO ,
Very common to have a fully repairing and insuring lease on commercial properties, you probably should get the lease looked at by a professional, if you proceed you would almost certainly have to anyway, There’s a reason freehold commercial property is rare, people hang onto it , if you can buy a unit that’s the way to go IMHO ,
unclegrouch said:
Morning PH,
I am hoping somebody with experience can offer some constructive advice for me please.
We are in the early stages of looking for additional premises to expand our small manufacturing business & found the perfect unit.
Details: 4000ish sq ft, decent office, tea room, clean, tidy etc etc.
The rent is a decent lump but affordable, there's an additional service charge for maintenance of the communal areas - all ok.
We have not seen the lease yet but it's through an agent & mentions FRI.
Alarm bells !!! I guess this means we have to pay for a survey & ensure the FRI part of the lease is only to maintian the unit to it's existing condition. My worry is that is could have roof leaks, foundation issues or even dodgy electrics & we would be responsible.
Any ideas of cost of a survey / chances of "negotiating" the FRI / or walk away ?
A good scheme is this FRI (for the landlord !!)
cheers all, have a godd Monday
No scam, it's standard practice. Some landlord's may permit Internal Repairing and Insuring leases, but your rent will be higher to reflect their additional costs. If you do walk away, you'll be doing very well indeed to find a landlord who doesn't require an FR&I lease.I am hoping somebody with experience can offer some constructive advice for me please.
We are in the early stages of looking for additional premises to expand our small manufacturing business & found the perfect unit.
Details: 4000ish sq ft, decent office, tea room, clean, tidy etc etc.
The rent is a decent lump but affordable, there's an additional service charge for maintenance of the communal areas - all ok.
We have not seen the lease yet but it's through an agent & mentions FRI.
Alarm bells !!! I guess this means we have to pay for a survey & ensure the FRI part of the lease is only to maintian the unit to it's existing condition. My worry is that is could have roof leaks, foundation issues or even dodgy electrics & we would be responsible.
Any ideas of cost of a survey / chances of "negotiating" the FRI / or walk away ?
A good scheme is this FRI (for the landlord !!)
cheers all, have a godd Monday
You need to pay a Chartered Building Surveyor to complete a Schedule of Condition which will be attached to the lease. It is a written and photographic schedule of the current condition of the building - the FR&I element of the lease will then require you to put the property back to it's current condition and no better.
I've no idea of the costs, but if you're in the North West I can recommend someone.
It’s basically a method for the landlord to screw extra money from you. If landlords actually spent the money repairing the buildings then there wouldn’t be any run down dumps!
The unit we purchased was used for one year as storage; the previous tenant got hit with an £8k bill. Bare in mind we were purchasing the unit ‘as is’ no money was ever going to be spent on it.
The unit we purchased was used for one year as storage; the previous tenant got hit with an £8k bill. Bare in mind we were purchasing the unit ‘as is’ no money was ever going to be spent on it.
Having just closed my small engineering company, I can only advise you to ensure you have a good survey done before you sign any lease.
We took out a 10 year FRI lease on a 6,000 sq.ft. workshop just outside Poole. We'd been with the landlord in a smaller unit for 5 years, and needed to expand. He was a really decent guy; very approachable, always looked after the fabric of the building, even when it was not strictly his duty. Our unit was one of 10 in a row; as the other units became empty, he would refurb and improve, to the extent of re-roofing them. We had a small recurring leak, which he would fix, promising to re-roof the entire workshop at a time convenient to us, at his cost. Like I said; a real gent, and a pleasure to do business with. He had a portfolio of around 600 units along the South coast.
A couple of years before our lease was due to expire, he decided he'd had enough, and sold his business to a consortium, putting Savills in charge of running the properties. And boy, did they want their pound of flesh!
Upshot was, it was going to cost us around £60,000 at the end of our lease. New roof, new screed floor and a list of other bits as long as your arm, even down to wanting all the data lines removed (that were in the unit when we took it over). We engaged a property surveyor (recommended by the old landlord after I contacted him) who managed to get the final bill reduced by £25k, but the whole situation left a nasty taste in my mouth. I could have accepted a redecoration and repair of any damage, but they were effectively getting a completely renovated unit, at no cost to them.
So, even though FRI leases are the norm, cover your back, and make sure you know what your responsibilities are at the end of the lease. I was going to put the £35k it cost me towards an Aston Martin!
We took out a 10 year FRI lease on a 6,000 sq.ft. workshop just outside Poole. We'd been with the landlord in a smaller unit for 5 years, and needed to expand. He was a really decent guy; very approachable, always looked after the fabric of the building, even when it was not strictly his duty. Our unit was one of 10 in a row; as the other units became empty, he would refurb and improve, to the extent of re-roofing them. We had a small recurring leak, which he would fix, promising to re-roof the entire workshop at a time convenient to us, at his cost. Like I said; a real gent, and a pleasure to do business with. He had a portfolio of around 600 units along the South coast.
A couple of years before our lease was due to expire, he decided he'd had enough, and sold his business to a consortium, putting Savills in charge of running the properties. And boy, did they want their pound of flesh!
Upshot was, it was going to cost us around £60,000 at the end of our lease. New roof, new screed floor and a list of other bits as long as your arm, even down to wanting all the data lines removed (that were in the unit when we took it over). We engaged a property surveyor (recommended by the old landlord after I contacted him) who managed to get the final bill reduced by £25k, but the whole situation left a nasty taste in my mouth. I could have accepted a redecoration and repair of any damage, but they were effectively getting a completely renovated unit, at no cost to them.
So, even though FRI leases are the norm, cover your back, and make sure you know what your responsibilities are at the end of the lease. I was going to put the £35k it cost me towards an Aston Martin!
It does not need to cost you money. Go in with your eyes open and engage a Surveyor.
If there is any dilapidation compare it with your lease terms. If it leaves you exposed you want rent free to sort it, or it sorted. If neither is forthcoming you need a Schedule of Condition (witch is refereed to in the lease) which documents the condition and ensure that you are not liable to put in any better repair.
A word of warning on these. If there is a dilapidated roof shown, which deteriorates further, you are going to end up sorting it properly as it will not be possible to put back into a 'semi-state' of repair.
If there is any dilapidation compare it with your lease terms. If it leaves you exposed you want rent free to sort it, or it sorted. If neither is forthcoming you need a Schedule of Condition (witch is refereed to in the lease) which documents the condition and ensure that you are not liable to put in any better repair.
A word of warning on these. If there is a dilapidated roof shown, which deteriorates further, you are going to end up sorting it properly as it will not be possible to put back into a 'semi-state' of repair.
many thanks to all for such informative replies.
All as expected & although it is standard practice, these FRI leases seem to be unattractive at best !! I have to consider my options, we want to expand & if we take 2 smaller units it would disrupt our daily work.
Nothing is simple is it !!
All as expected & although it is standard practice, these FRI leases seem to be unattractive at best !! I have to consider my options, we want to expand & if we take 2 smaller units it would disrupt our daily work.
Nothing is simple is it !!
Nothing simple when it comes to commercial property!
I'm about to extend in to the adjacent unit to me but this unit will have a Schedule of condition at a cost of £900 on the advice of my new solicitor, I made a big mistake not getting this done when I moved in to the current property 5 years ago.
Why didn't I bother back then ? Well my landlord was always reasonable, having let from him for years before that already, and he gave me a decent rent free, and I didn't see the real risk at the time.
Little did I know he would soon sell to a pension fund, managed by bloody Savills! I don't trust them.
Not getting that schedule of condition on the first unit 5 years ago is going to cost me dearly when it comes to upping sticks, which I plan on doing because I want to buy my own property in the next 4-8 years. I do wonder if it'd be worth moving the companies assets in to another company and tell the landlord to whistle for it?
I'm about to extend in to the adjacent unit to me but this unit will have a Schedule of condition at a cost of £900 on the advice of my new solicitor, I made a big mistake not getting this done when I moved in to the current property 5 years ago.
Why didn't I bother back then ? Well my landlord was always reasonable, having let from him for years before that already, and he gave me a decent rent free, and I didn't see the real risk at the time.
Little did I know he would soon sell to a pension fund, managed by bloody Savills! I don't trust them.
Not getting that schedule of condition on the first unit 5 years ago is going to cost me dearly when it comes to upping sticks, which I plan on doing because I want to buy my own property in the next 4-8 years. I do wonder if it'd be worth moving the companies assets in to another company and tell the landlord to whistle for it?
AdeTuono said:
Having just closed my small engineering company, I can only advise you to ensure you have a good survey done before you sign any lease.
We took out a 10 year FRI lease on a 6,000 sq.ft. workshop just outside Poole. We'd been with the landlord in a smaller unit for 5 years, and needed to expand. He was a really decent guy; very approachable, always looked after the fabric of the building, even when it was not strictly his duty. Our unit was one of 10 in a row; as the other units became empty, he would refurb and improve, to the extent of re-roofing them. We had a small recurring leak, which he would fix, promising to re-roof the entire workshop at a time convenient to us, at his cost. Like I said; a real gent, and a pleasure to do business with. He had a portfolio of around 600 units along the South coast.
A couple of years before our lease was due to expire, he decided he'd had enough, and sold his business to a consortium, putting Savills in charge of running the properties. And boy, did they want their pound of flesh!
Upshot was, it was going to cost us around £60,000 at the end of our lease. New roof, new screed floor and a list of other bits as long as your arm, even down to wanting all the data lines removed (that were in the unit when we took it over). We engaged a property surveyor (recommended by the old landlord after I contacted him) who managed to get the final bill reduced by £25k, but the whole situation left a nasty taste in my mouth. I could have accepted a redecoration and repair of any damage, but they were effectively getting a completely renovated unit, at no cost to them.
So, even though FRI leases are the norm, cover your back, and make sure you know what your responsibilities are at the end of the lease. I was going to put the £35k it cost me towards an Aston Martin!
Why not liquidate the business so the £35k is no longer available? Unless you’ve closed it sold it?We took out a 10 year FRI lease on a 6,000 sq.ft. workshop just outside Poole. We'd been with the landlord in a smaller unit for 5 years, and needed to expand. He was a really decent guy; very approachable, always looked after the fabric of the building, even when it was not strictly his duty. Our unit was one of 10 in a row; as the other units became empty, he would refurb and improve, to the extent of re-roofing them. We had a small recurring leak, which he would fix, promising to re-roof the entire workshop at a time convenient to us, at his cost. Like I said; a real gent, and a pleasure to do business with. He had a portfolio of around 600 units along the South coast.
A couple of years before our lease was due to expire, he decided he'd had enough, and sold his business to a consortium, putting Savills in charge of running the properties. And boy, did they want their pound of flesh!
Upshot was, it was going to cost us around £60,000 at the end of our lease. New roof, new screed floor and a list of other bits as long as your arm, even down to wanting all the data lines removed (that were in the unit when we took it over). We engaged a property surveyor (recommended by the old landlord after I contacted him) who managed to get the final bill reduced by £25k, but the whole situation left a nasty taste in my mouth. I could have accepted a redecoration and repair of any damage, but they were effectively getting a completely renovated unit, at no cost to them.
So, even though FRI leases are the norm, cover your back, and make sure you know what your responsibilities are at the end of the lease. I was going to put the £35k it cost me towards an Aston Martin!
cheekymeerkat said:
Nothing simple when it comes to commercial property!
I'm about to extend in to the adjacent unit to me but this unit will have a Schedule of condition at a cost of £900 on the advice of my new solicitor, I made a big mistake not getting this done when I moved in to the current property 5 years ago.
Why didn't I bother back then ? Well my landlord was always reasonable, having let from him for years before that already, and he gave me a decent rent free, and I didn't see the real risk at the time.
Little did I know he would soon sell to a pension fund, managed by bloody Savills! I don't trust them.
Not getting that schedule of condition on the first unit 5 years ago is going to cost me dearly when it comes to upping sticks, which I plan on doing because I want to buy my own property in the next 4-8 years. I do wonder if it'd be worth moving the companies assets in to another company and tell the landlord to whistle for it?
I've managed plenty of client moves over the years and usually save at least 50% on dilaps, simply by reading the lease, forming a view and arranging for the work to be done ourselves. There are some daft clauses where you can argue that there is no diminution in value, such as removing tenant installed AC and often network cabling. basically get good advice early and then plan well.I'm about to extend in to the adjacent unit to me but this unit will have a Schedule of condition at a cost of £900 on the advice of my new solicitor, I made a big mistake not getting this done when I moved in to the current property 5 years ago.
Why didn't I bother back then ? Well my landlord was always reasonable, having let from him for years before that already, and he gave me a decent rent free, and I didn't see the real risk at the time.
Little did I know he would soon sell to a pension fund, managed by bloody Savills! I don't trust them.
Not getting that schedule of condition on the first unit 5 years ago is going to cost me dearly when it comes to upping sticks, which I plan on doing because I want to buy my own property in the next 4-8 years. I do wonder if it'd be worth moving the companies assets in to another company and tell the landlord to whistle for it?
To be complete, I will also mention break clauses These are often conditional on complying with the terms of the lease (not when I'm acquiring!). This means that any dilapidation's, or breaches can invalidate a break clause. It is very important to take advice and be very very careful....
aceparts said:
AdeTuono said:
Having just closed my small engineering company, I can only advise you to ensure you have a good survey done before you sign any lease.
We took out a 10 year FRI lease on a 6,000 sq.ft. workshop just outside Poole. We'd been with the landlord in a smaller unit for 5 years, and needed to expand. He was a really decent guy; very approachable, always looked after the fabric of the building, even when it was not strictly his duty. Our unit was one of 10 in a row; as the other units became empty, he would refurb and improve, to the extent of re-roofing them. We had a small recurring leak, which he would fix, promising to re-roof the entire workshop at a time convenient to us, at his cost. Like I said; a real gent, and a pleasure to do business with. He had a portfolio of around 600 units along the South coast.
A couple of years before our lease was due to expire, he decided he'd had enough, and sold his business to a consortium, putting Savills in charge of running the properties. And boy, did they want their pound of flesh!
Upshot was, it was going to cost us around £60,000 at the end of our lease. New roof, new screed floor and a list of other bits as long as your arm, even down to wanting all the data lines removed (that were in the unit when we took it over). We engaged a property surveyor (recommended by the old landlord after I contacted him) who managed to get the final bill reduced by £25k, but the whole situation left a nasty taste in my mouth. I could have accepted a redecoration and repair of any damage, but they were effectively getting a completely renovated unit, at no cost to them.
So, even though FRI leases are the norm, cover your back, and make sure you know what your responsibilities are at the end of the lease. I was going to put the £35k it cost me towards an Aston Martin!
Why not liquidate the business so the £35k is no longer available? Unless you’ve closed it sold it?We took out a 10 year FRI lease on a 6,000 sq.ft. workshop just outside Poole. We'd been with the landlord in a smaller unit for 5 years, and needed to expand. He was a really decent guy; very approachable, always looked after the fabric of the building, even when it was not strictly his duty. Our unit was one of 10 in a row; as the other units became empty, he would refurb and improve, to the extent of re-roofing them. We had a small recurring leak, which he would fix, promising to re-roof the entire workshop at a time convenient to us, at his cost. Like I said; a real gent, and a pleasure to do business with. He had a portfolio of around 600 units along the South coast.
A couple of years before our lease was due to expire, he decided he'd had enough, and sold his business to a consortium, putting Savills in charge of running the properties. And boy, did they want their pound of flesh!
Upshot was, it was going to cost us around £60,000 at the end of our lease. New roof, new screed floor and a list of other bits as long as your arm, even down to wanting all the data lines removed (that were in the unit when we took it over). We engaged a property surveyor (recommended by the old landlord after I contacted him) who managed to get the final bill reduced by £25k, but the whole situation left a nasty taste in my mouth. I could have accepted a redecoration and repair of any damage, but they were effectively getting a completely renovated unit, at no cost to them.
So, even though FRI leases are the norm, cover your back, and make sure you know what your responsibilities are at the end of the lease. I was going to put the £35k it cost me towards an Aston Martin!
cheekymeerkat said:
Nothing simple when it comes to commercial property!
I'm about to extend in to the adjacent unit to me but this unit will have a Schedule of condition at a cost of £900 on the advice of my new solicitor, I made a big mistake not getting this done when I moved in to the current property 5 years ago.
Why didn't I bother back then ? Well my landlord was always reasonable, having let from him for years before that already, and he gave me a decent rent free, and I didn't see the real risk at the time.
Little did I know he would soon sell to a pension fund, managed by bloody Savills! I don't trust them.
Not getting that schedule of condition on the first unit 5 years ago is going to cost me dearly when it comes to upping sticks, which I plan on doing because I want to buy my own property in the next 4-8 years. I do wonder if it'd be worth moving the companies assets in to another company and tell the landlord to whistle for it?
That sounds exactly the same as my experience. Your original landlord's initials weren't GM, were they? Are you on the South coast?I'm about to extend in to the adjacent unit to me but this unit will have a Schedule of condition at a cost of £900 on the advice of my new solicitor, I made a big mistake not getting this done when I moved in to the current property 5 years ago.
Why didn't I bother back then ? Well my landlord was always reasonable, having let from him for years before that already, and he gave me a decent rent free, and I didn't see the real risk at the time.
Little did I know he would soon sell to a pension fund, managed by bloody Savills! I don't trust them.
Not getting that schedule of condition on the first unit 5 years ago is going to cost me dearly when it comes to upping sticks, which I plan on doing because I want to buy my own property in the next 4-8 years. I do wonder if it'd be worth moving the companies assets in to another company and tell the landlord to whistle for it?
Interesting additions from Adetuono & Surveyor,
I have been so lucky until now, we have rented units / shops since 1990 & only ever signed one lease & that was a simple one on a small shop.
So a survey is likely to cost the thick end of a grand ?? Then the legal fees - not cheap but better than being landed with a £20-£30k bill in 5 yrs.
Another question, once a lease is presented to me for a signature, would my legal advisor then barter with the landlords solicitor to thrash out agreeable terms, or would he advise me what to accept / reject ?
All these years running a little business & I feel like a newbie again
I have been so lucky until now, we have rented units / shops since 1990 & only ever signed one lease & that was a simple one on a small shop.
So a survey is likely to cost the thick end of a grand ?? Then the legal fees - not cheap but better than being landed with a £20-£30k bill in 5 yrs.
Another question, once a lease is presented to me for a signature, would my legal advisor then barter with the landlords solicitor to thrash out agreeable terms, or would he advise me what to accept / reject ?
All these years running a little business & I feel like a newbie again
unclegrouch said:
Interesting additions from Adetuono & Surveyor,
I have been so lucky until now, we have rented units / shops since 1990 & only ever signed one lease & that was a simple one on a small shop.
So a survey is likely to cost the thick end of a grand ?? Then the legal fees - not cheap but better than being landed with a £20-£30k bill in 5 yrs.
Another question, once a lease is presented to me for a signature, would my legal advisor then barter with the landlords solicitor to thrash out agreeable terms, or would he advise me what to accept / reject ?
All these years running a little business & I feel like a newbie again
Your legal advisor should negotiate the lease, and present a report to ensure that you are aware of the obligations, particularly where they have not managed to negotiate out onerous clauses.I have been so lucky until now, we have rented units / shops since 1990 & only ever signed one lease & that was a simple one on a small shop.
So a survey is likely to cost the thick end of a grand ?? Then the legal fees - not cheap but better than being landed with a £20-£30k bill in 5 yrs.
Another question, once a lease is presented to me for a signature, would my legal advisor then barter with the landlords solicitor to thrash out agreeable terms, or would he advise me what to accept / reject ?
All these years running a little business & I feel like a newbie again
unclegrouch said:
Interesting additions from Adetuono & Surveyor,
I have been so lucky until now, we have rented units / shops since 1990 & only ever signed one lease & that was a simple one on a small shop.
So a survey is likely to cost the thick end of a grand ?? Then the legal fees - not cheap but better than being landed with a £20-£30k bill in 5 yrs.
Another question, once a lease is presented to me for a signature, would my legal advisor then barter with the landlords solicitor to thrash out agreeable terms, or would he advise me what to accept / reject ?
All these years running a little business & I feel like a newbie again
We did this recently, £1000 for a survey sound right but this can vary depending on the details of the survey. One thing I can advise is get a commercial solicitor, ours gave advice/amendments your normal educated person wouldn't even think consider. Good luck.I have been so lucky until now, we have rented units / shops since 1990 & only ever signed one lease & that was a simple one on a small shop.
So a survey is likely to cost the thick end of a grand ?? Then the legal fees - not cheap but better than being landed with a £20-£30k bill in 5 yrs.
Another question, once a lease is presented to me for a signature, would my legal advisor then barter with the landlords solicitor to thrash out agreeable terms, or would he advise me what to accept / reject ?
All these years running a little business & I feel like a newbie again
loafer123 said:
FRI leases are mostly an obligation to keep the property in good repair, so if it is good when you get it, and good when you leave it, you’ll be fine, but you are responsible for maintaining the property, whether it be to deal with roof leaks or to decorate in the meantime.
FRI leases are mostly an obligation to put and keep the property in good repair. It is essential that a prospective tenant understands their obligations and any potential liability caused by disrepair at the start of the lease. Gassing Station | Business | Top of Page | What's New | My Stuff