Commercial letting checklist (Landlords)
Discussion
All after a good few years I'm a pretty competent LL I hope but we have recently bought our first commercial properly to let. Its a small 1200 square foot unit ideal for storage and has a small office on the first floor.
In terms of vetting/ checking what do people recommend?
So far I've got
Contracts
Sign out of 1954 act
Schedule of condition
My terms are quarterly up front so hope to avoid none payers that way
Its not Donald trump stuff 450 a month rent but just want to make sure we are doing it right from the off.
I know there are many much more experienced guys in here so input welcome cheers.
In terms of vetting/ checking what do people recommend?
So far I've got
Contracts
Sign out of 1954 act
Schedule of condition
My terms are quarterly up front so hope to avoid none payers that way
Its not Donald trump stuff 450 a month rent but just want to make sure we are doing it right from the off.
I know there are many much more experienced guys in here so input welcome cheers.
I assume within ‘contract’ you have made an allowance for a deposit? We typically aim to achieve 6 months’ equivalent for the rent deposit for our Landlords, subject to covenant strength and associated terms of course, or alternatively a PG. I imagine it’s an FRI lease?
A number of prospective tenants are now seeking Covid-related protection clauses included in their terms, for example if there’s another lockdown resulting in an inability to occupy, they expect a rent holiday (written into the contract).
We would also verify ID, proof of address, run AML checks etc.
A number of prospective tenants are now seeking Covid-related protection clauses included in their terms, for example if there’s another lockdown resulting in an inability to occupy, they expect a rent holiday (written into the contract).
We would also verify ID, proof of address, run AML checks etc.
fridaypassion said:
All after a good few years I'm a pretty competent LL I hope but we have recently bought our first commercial properly to let. Its a small 1200 square foot unit ideal for storage and has a small office on the first floor.
In terms of vetting/ checking what do people recommend?
So far I've got
Contracts
Sign out of 1954 act
Schedule of condition
My terms are quarterly up front so hope to avoid none payers that way
Its not Donald trump stuff 450 a month rent but just want to make sure we are doing it right from the off.
I know there are many much more experienced guys in here so input welcome cheers.
Why do you want it outside the act, seems an aggressive act at the outset of the lease? 95% of commercial leases are within the act, investors want tenants in occupation. You can still remove the tenant at the expiry of the lease, you just need to meet one of the grounds.In terms of vetting/ checking what do people recommend?
So far I've got
Contracts
Sign out of 1954 act
Schedule of condition
My terms are quarterly up front so hope to avoid none payers that way
Its not Donald trump stuff 450 a month rent but just want to make sure we are doing it right from the off.
I know there are many much more experienced guys in here so input welcome cheers.
I presume that on the basis you're having a schedule of condition prepared the lease will be full repairing and insuring. Make sure you make clear to the tenant from the outset what their responsibilities are and what will happen if they don't maintain the property - dilapidation's claim. PH is full of tenants claiming their landlord is ripping them off at the end of the tenancy as they think renting a commercial unit is the same as renting a flat.
As stated above, get insured advice from a solicitor. You will only find out the worth of that advice when things go wrong.
You only need a good lawyer if you have a bad tenant and the lawyer will tell you all the things you cant do, at a cost.
So chose your tenants carefully.
Don't rely on them reading and understanding the contract, tell them everything face to face at the beginning.
Consider them paying monthly, cashflow is king and you get a better warning of things going wrong and therefore a better chance of sorting it out.
Be the best landlord you can be, be flexible, ask for all the things you want like upwards only and rent reviews but if they ask for a 12 month rolling exit clause don't rule it out.
Make sure the tenant knows all the little things they have to pay for like building insurance but also explain what full maintaining means.
So chose your tenants carefully.
Don't rely on them reading and understanding the contract, tell them everything face to face at the beginning.
Consider them paying monthly, cashflow is king and you get a better warning of things going wrong and therefore a better chance of sorting it out.
Be the best landlord you can be, be flexible, ask for all the things you want like upwards only and rent reviews but if they ask for a 12 month rolling exit clause don't rule it out.
Make sure the tenant knows all the little things they have to pay for like building insurance but also explain what full maintaining means.
Dixy said:
You only need a good lawyer if you have a bad tenant and the lawyer will tell you all the things you cant do, at a cost.
Sorry I don't agree, you need to have a good lawyer to ensure the lease is properly weighted in your favour. As a rule of thumb, the vast majority of the provisions in a lease are to protect the landlord, as a rule of thumb, the longer it is, the better it is for the landlord.Dixy said:
Make sure the tenant knows all the little things they have to pay for like building insurance.
Surely you wouldn’t leave the buildings insurance to the tenant? As the owner I would prefer the peace of mind that buildings insurance is done by myself and contents by the tensnt.Muncher said:
1,Sorry I don't agree,
2, you need to have a good lawyer to ensure the lease is properly weighted in your favour.as a rule of thumb,
3, the longer it is, the better it is for the landlord.
1 You would not as it stops you having your snout in the trough.2, you need to have a good lawyer to ensure the lease is properly weighted in your favour.as a rule of thumb,
3, the longer it is, the better it is for the landlord.
2 this should be a symbiotic relationship, if it is weighted in either direction someone will get resentful.
3 No s
t SherlockI've got a dozen or so commercials. I have an a managing agent, but all they do is process rent.
All of them are on what's best described as 'nod and a handshake' type agreements with laughably basic paperwork and certainly no lawyers anywhere near any of it.
Plenty of things have come up over the years (decades) but nothing we haven't managed to 'sort', including the current Covid nonsense and all it's meant especially for retail traders of certain types.
As usual, the application of common sense is probably the most important thing.
BI for freestanding premises is usually included in their commercial combined policies which they are asked to show the agent once a year.
I've also often rented premises myself as the tenant and whilst the landlords have had all kinds of approaches I've found the best ones to be the least formal ones as outlined above.
All of them are on what's best described as 'nod and a handshake' type agreements with laughably basic paperwork and certainly no lawyers anywhere near any of it.
Plenty of things have come up over the years (decades) but nothing we haven't managed to 'sort', including the current Covid nonsense and all it's meant especially for retail traders of certain types.
As usual, the application of common sense is probably the most important thing.
BI for freestanding premises is usually included in their commercial combined policies which they are asked to show the agent once a year.
I've also often rented premises myself as the tenant and whilst the landlords have had all kinds of approaches I've found the best ones to be the least formal ones as outlined above.
JQ said:
Why do you want it outside the act, seems an aggressive act at the outset of the lease? 95% of commercial leases are within the act, investors want tenants in occupation. You can still remove the tenant at the expiry of the lease, you just need to meet one of the grounds.
I presume that on the basis you're having a schedule of condition prepared the lease will be full repairing and insuring. Make sure you make clear to the tenant from the outset what their responsibilities are and what will happen if they don't maintain the property - dilapidation's claim. PH is full of tenants claiming their landlord is ripping them off at the end of the tenancy as they think renting a commercial unit is the same as renting a flat.
As stated above, get insured advice from a solicitor. You will only find out the worth of that advice when things go wrong.
I've been on the end of a 20 years on the job family business "property manager" he knows why you contract out now after our discussions and yes it was dilapidations that kicked that off. I cant imagine why anyone would allow a tenancy within the act even my green currently punter only experience of the wild west commercial lettings law tells me that. I presume that on the basis you're having a schedule of condition prepared the lease will be full repairing and insuring. Make sure you make clear to the tenant from the outset what their responsibilities are and what will happen if they don't maintain the property - dilapidation's claim. PH is full of tenants claiming their landlord is ripping them off at the end of the tenancy as they think renting a commercial unit is the same as renting a flat.
As stated above, get insured advice from a solicitor. You will only find out the worth of that advice when things go wrong.
Thanks everyone for the input all points duly noted.
I've listed the property this morning and been inundated with requests for viewings so just need to make sure we pick a good tenant. Had all sorts of dodgy folks sniffing about but I think few genuine.
fridaypassion said:
I've been on the end of a 20 years on the job family business "property manager" he knows why you contract out now after our discussions and yes it was dilapidations that kicked that off. I cant imagine why anyone would allow a tenancy within the act even my green currently punter only experience of the wild west commercial lettings law tells me that.
Can you expand on that as I don't understand what you are saying.If you don’t employ a decent commercial letting agent, you should consider the following as part of the vetting process of any would-be tenant... a) two written tenant references (including trade ones if they are already trading) b) a bank reference & if you need to, don’t be afraid to request a rent deposit of 6 months rent equivalent. You should be requesting the references directly & not allowing the tenant to provide you with written references.
As others have said, you’d be best placed to insure the building & reclaim the cost from the tenant under the terms of the lease. The tenant would be responsible for their contents insurance.
As others have said, you’d be best placed to insure the building & reclaim the cost from the tenant under the terms of the lease. The tenant would be responsible for their contents insurance.
MrC986 said:
If you don’t employ a decent commercial letting agent, you should consider the following as part of the vetting process of any would-be tenant... a) two written tenant references (including trade ones if they are already trading) b) a bank reference & if you need to, don’t be afraid to request a rent deposit of 6 months rent equivalent. You should be requesting the references directly & not allowing the tenant to provide you with written references.
As others have said, you’d be best placed to insure the building & reclaim the cost from the tenant under the terms of the lease. The tenant would be responsible for their contents insurance.
Good luck with the 6 month rent deposit. It all depends on demand, in many areas landlords are lucky to get away with only giving the first 6 months rent free to someone signing a 3 year lease.As others have said, you’d be best placed to insure the building & reclaim the cost from the tenant under the terms of the lease. The tenant would be responsible for their contents insurance.
singlecoil said:
Good luck with the 6 month rent deposit. It all depends on demand, in many areas landlords are lucky to get away with only giving the first 6 months rent free to someone signing a 3 year lease.
The industrial and warehouse market is clearly in a better state than the retail /office sectors. As you say, it’s all about demand/supply & we’re giving some suggestions 
Dixy said:
fridaypassion said:
I've been on the end of a 20 years on the job family business "property manager" he knows why you contract out now after our discussions and yes it was dilapidations that kicked that off. I cant imagine why anyone would allow a tenancy within the act even my green currently punter only experience of the wild west commercial lettings law tells me that.
Can you expand on that as I don't understand what you are saying.
Here's what I think;
OP has had some discussions with a chap who has 20 years' in the property management business (family owned).
Following these discussions, this chap has undergone a moment of clarity, and now considers that one should opt out of the Landlord and Tenant Act 1954 (LTA 1954).
The OP feels good about this, but is incorrect.
I don't really want to go into details as we still have some dealings with the company involved in that but I can tell you that they will never not contract out in their properties again.
Expand on the reasons you would allow a commercial tenant to have full control over your building?
Expand on the reasons you would allow a commercial tenant to have full control over your building?
Gassing Station | Business | Top of Page | What's New | My Stuff