Any commercial lease experts around?
Discussion
Scenario is:
Village Hall wants to rent space long-term to tenant
Space to rent needs refurbishing first
Tenant will pay 3 years rent in advance OR commission work themselves
Village Hall will charge rent after year 3
Likely 20 year term with breaks
Questions:
Anyone on here do this stuff - i.e. draw up suitable tenancy agreement etc?
Are there any pros / cons of approach to the upfront investment (£10k)? My thought is that what incoming tenant does with the space is up to them, they should just pay the bill. They think they should pay us the rent and we take responsibility for the work. Either way its the same builder and cost.
Normal solicitor is being tardy and time is now of the essence, hence asking here!
Cheers all!
Village Hall wants to rent space long-term to tenant
Space to rent needs refurbishing first
Tenant will pay 3 years rent in advance OR commission work themselves
Village Hall will charge rent after year 3
Likely 20 year term with breaks
Questions:
Anyone on here do this stuff - i.e. draw up suitable tenancy agreement etc?
Are there any pros / cons of approach to the upfront investment (£10k)? My thought is that what incoming tenant does with the space is up to them, they should just pay the bill. They think they should pay us the rent and we take responsibility for the work. Either way its the same builder and cost.
Normal solicitor is being tardy and time is now of the essence, hence asking here!
Cheers all!
There may be tax disadvantages and definitely hassle factor in hall taking responsibility.
If tenant carries out alterations they will be responsible for reinstatement at end (subject to LL wanting reinstatement and no-one agreeing any different in the lease).
3 Years rent free is a lot (so is £10k in a village hall). Is the work to suit the tenant (in which case it is debatable whether it should be rent free to my mind), or to make the space habitable. What is the work roughly?
I have someone I have recommended in the past, but they are quite expensive. Hopefully we will have a PH bod in-house.
If tenant carries out alterations they will be responsible for reinstatement at end (subject to LL wanting reinstatement and no-one agreeing any different in the lease).
3 Years rent free is a lot (so is £10k in a village hall). Is the work to suit the tenant (in which case it is debatable whether it should be rent free to my mind), or to make the space habitable. What is the work roughly?
I have someone I have recommended in the past, but they are quite expensive. Hopefully we will have a PH bod in-house.
Thanks for the replies.
The works are relatively minor - the space is currently a bare shell, so needs electrics, plaster boarding walls and ceiling, flooring, a store room built (stud walls), kitchenette building, heating installing. It’s not specifically to benefit the tenant - it would benefit any incoming tenant.
We (Village Hall) can’t raise the funds readily to complete it (there are other things competing for money) and incoming tenant can provide the capital (it’s actually another charity). The build costs are equivalent to 3 years rent. We wouldn’t require it returning to as-is condition (primarily because that would mean turning it back into a derelict space).
The works are relatively minor - the space is currently a bare shell, so needs electrics, plaster boarding walls and ceiling, flooring, a store room built (stud walls), kitchenette building, heating installing. It’s not specifically to benefit the tenant - it would benefit any incoming tenant.
We (Village Hall) can’t raise the funds readily to complete it (there are other things competing for money) and incoming tenant can provide the capital (it’s actually another charity). The build costs are equivalent to 3 years rent. We wouldn’t require it returning to as-is condition (primarily because that would mean turning it back into a derelict space).
What’s the nature of the works and the intended use?
If the landlord were to get the property back after 12 months would it feel like it has had £30k of value?
Ultimately I am not sure it makes much difference how it is structured, but I would err on the side of the tenant carrying out the works themselves and then a 3 year rent free. That could be documented by way of a licence for alterations. If the landlord is doing the works the tenant may not want to be bound to enter into the lease until the works have been completed to its satisfaction which could lead to a more complicated agreement for lease.
Happy to help in a professional capacity should you wish, if all parties are willing I can turn it around fairly quickly.
If the landlord were to get the property back after 12 months would it feel like it has had £30k of value?
Ultimately I am not sure it makes much difference how it is structured, but I would err on the side of the tenant carrying out the works themselves and then a 3 year rent free. That could be documented by way of a licence for alterations. If the landlord is doing the works the tenant may not want to be bound to enter into the lease until the works have been completed to its satisfaction which could lead to a more complicated agreement for lease.
Happy to help in a professional capacity should you wish, if all parties are willing I can turn it around fairly quickly.
Thanks Muncher.
Intended use is small office for local Benefice. We’re comfortable that it is in line with the purpose of the hall to provide for the community per our constitution. Works is taking it from bare shell (all windows / external doors in, toilets in) into usable space - details above.
Total cost of work is £10k. Annual rent £3.5k. Very little chance of getting space back after 12 months but never say never.
Appreciate the advice. Would be great to understand a rough cost via PM if you wouldn’t mind?
Intended use is small office for local Benefice. We’re comfortable that it is in line with the purpose of the hall to provide for the community per our constitution. Works is taking it from bare shell (all windows / external doors in, toilets in) into usable space - details above.
Total cost of work is £10k. Annual rent £3.5k. Very little chance of getting space back after 12 months but never say never.
Appreciate the advice. Would be great to understand a rough cost via PM if you wouldn’t mind?
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