Renting Out Units On A Farm
Discussion
My father had a farm and rented out units on a handshake - no problems over the last 20 years
He has died and I have cleared a couple of units I'd like to rent out
All above board, paying Rates etc in a modern building, consents for Automotive sales and repairs
Both are quite small but have a decent amount of parking
Is there a standard form of agreement as with Residential ?
I presume I insure the building (it's one building with 3 seperate units) and they insure their contents ? I'm happy to maintain it.
At this (low) level I presume it's not worth getting a Commercial Agent involved, I expect combined rent to be circa £2k / month
Anything else I should be aware of ?
He has died and I have cleared a couple of units I'd like to rent out
All above board, paying Rates etc in a modern building, consents for Automotive sales and repairs
Both are quite small but have a decent amount of parking
Is there a standard form of agreement as with Residential ?
I presume I insure the building (it's one building with 3 seperate units) and they insure their contents ? I'm happy to maintain it.
At this (low) level I presume it's not worth getting a Commercial Agent involved, I expect combined rent to be circa £2k / month
Anything else I should be aware of ?
Your best bet is to get solicitor to draw up a lease agreement or license.
Other things to check out/consider are, in no particular order:
Option to tax (probably best avoided if it’s not a long term arrangement)
Insurance coverage (especially if it’s one building, several tenants) - you need to avoid say a fire in one causing issues beyond that one unit
Utilities - how are they contracted/paid (e.g. separate supplies vs re-billing). If it’s re-billing to the tenant then watch your credit exposure. ,
Set really clear expectations around noise, waste, tidiness, and working hours. Keep the place clean/tidy and it’s more likely to stay that way but let it slide and it’d be easy to end up with loads of (tricky) waste to get rid of, especially with automotive tenants where you might end up with waste oils and tyres. .
Rateable value probably low, but check if you’re on the hook if unoccupied.
Other things to check out/consider are, in no particular order:
Option to tax (probably best avoided if it’s not a long term arrangement)
Insurance coverage (especially if it’s one building, several tenants) - you need to avoid say a fire in one causing issues beyond that one unit
Utilities - how are they contracted/paid (e.g. separate supplies vs re-billing). If it’s re-billing to the tenant then watch your credit exposure. ,
Set really clear expectations around noise, waste, tidiness, and working hours. Keep the place clean/tidy and it’s more likely to stay that way but let it slide and it’d be easy to end up with loads of (tricky) waste to get rid of, especially with automotive tenants where you might end up with waste oils and tyres. .
Rateable value probably low, but check if you’re on the hook if unoccupied.
This will go one of two ways. Hopefully, as per your Father’s time with it, steady income and no hassle. Or it could be a management nightmare.
The key thing is to be ultra-picky about who you let the units to. If you get an occupier/tenant that doesn’t pay or causes a nuisance or damages the building, whether the unit it on a lease or licence becomes a bit academic. There’s little point going legal, so it will be down to you to manage the situation with a non-performing tenant.
Choose the tenants with the highest turnover and longest trading history you can. Ideally with a good local reputation that is important to them. The more established they are (vat registered, limited company with reasonable turnover) the less likely they are to put the thing in to administration to waggle out of lease or licence obligations. Or leave you with a unit full of rubbish.
The other key point is, as mentioned above, run an ultra tight ship from the start. Tell people if they don’t pay or cause a nuisance, you’ll take the unit back straight away. Be really careful about the yard areas - be very specific about where tenants can park and what they can park. Any softness on your part and before you know it, you’ll have the tenants mates caravan and boat in your yard and a load of bangers that never move. Some people overcome this with a blanket “no vehicles left outside at night rule”. This deters a chunk of crime too - catalytic converter theft etc.
Another consideration is whether you can put a very heavy duty gate or barrier across the access to the property. Then get special keys that are hard to replicate and only give them to your named tenants, not their staff etc. also include a “last one out locks the gate” obligation in whatever agreement you put in place.
Good luck with it.
The key thing is to be ultra-picky about who you let the units to. If you get an occupier/tenant that doesn’t pay or causes a nuisance or damages the building, whether the unit it on a lease or licence becomes a bit academic. There’s little point going legal, so it will be down to you to manage the situation with a non-performing tenant.
Choose the tenants with the highest turnover and longest trading history you can. Ideally with a good local reputation that is important to them. The more established they are (vat registered, limited company with reasonable turnover) the less likely they are to put the thing in to administration to waggle out of lease or licence obligations. Or leave you with a unit full of rubbish.
The other key point is, as mentioned above, run an ultra tight ship from the start. Tell people if they don’t pay or cause a nuisance, you’ll take the unit back straight away. Be really careful about the yard areas - be very specific about where tenants can park and what they can park. Any softness on your part and before you know it, you’ll have the tenants mates caravan and boat in your yard and a load of bangers that never move. Some people overcome this with a blanket “no vehicles left outside at night rule”. This deters a chunk of crime too - catalytic converter theft etc.
Another consideration is whether you can put a very heavy duty gate or barrier across the access to the property. Then get special keys that are hard to replicate and only give them to your named tenants, not their staff etc. also include a “last one out locks the gate” obligation in whatever agreement you put in place.
Good luck with it.
Tom4398cc said:
This will go one of two ways. Hopefully, as per your Father’s time with it, steady income and no hassle. Or it could be a management nightmare.
The key thing is to be ultra-picky about who you let the units to. If you get an occupier/tenant that doesn’t pay or causes a nuisance or damages the building, whether the unit it on a lease or licence becomes a bit academic. There’s little point going legal, so it will be down to you to manage the situation with a non-performing tenant.
Choose the tenants with the highest turnover and longest trading history you can. Ideally with a good local reputation that is important to them. The more established they are (vat registered, limited company with reasonable turnover) the less likely they are to put the thing in to administration to waggle out of lease or licence obligations. Or leave you with a unit full of rubbish.
The other key point is, as mentioned above, run an ultra tight ship from the start. Tell people if they don’t pay or cause a nuisance, you’ll take the unit back straight away. Be really careful about the yard areas - be very specific about where tenants can park and what they can park. Any softness on your part and before you know it, you’ll have the tenants mates caravan and boat in your yard and a load of bangers that never move. Some people overcome this with a blanket “no vehicles left outside at night rule”. This deters a chunk of crime too - catalytic converter theft etc.
Another consideration is whether you can put a very heavy duty gate or barrier across the access to the property. Then get special keys that are hard to replicate and only give them to your named tenants, not their staff etc. also include a “last one out locks the gate” obligation in whatever agreement you put in place.
Good luck with it.
That's all good advice. I winced when I bought the gates/locks at our place but knowing how many keys are in circulation is important, however also keep a spare lock (that only you have a key for) in case you have someone depart under a cloud and fail to hand the key back. Will eventually move to electric gates/fobs but that's not made it to the top of the list yet.The key thing is to be ultra-picky about who you let the units to. If you get an occupier/tenant that doesn’t pay or causes a nuisance or damages the building, whether the unit it on a lease or licence becomes a bit academic. There’s little point going legal, so it will be down to you to manage the situation with a non-performing tenant.
Choose the tenants with the highest turnover and longest trading history you can. Ideally with a good local reputation that is important to them. The more established they are (vat registered, limited company with reasonable turnover) the less likely they are to put the thing in to administration to waggle out of lease or licence obligations. Or leave you with a unit full of rubbish.
The other key point is, as mentioned above, run an ultra tight ship from the start. Tell people if they don’t pay or cause a nuisance, you’ll take the unit back straight away. Be really careful about the yard areas - be very specific about where tenants can park and what they can park. Any softness on your part and before you know it, you’ll have the tenants mates caravan and boat in your yard and a load of bangers that never move. Some people overcome this with a blanket “no vehicles left outside at night rule”. This deters a chunk of crime too - catalytic converter theft etc.
Another consideration is whether you can put a very heavy duty gate or barrier across the access to the property. Then get special keys that are hard to replicate and only give them to your named tenants, not their staff etc. also include a “last one out locks the gate” obligation in whatever agreement you put in place.
Good luck with it.
On the business rates do not include the rates in the rent. 2 reasons:-
If the units are small and let to a small business chances are they won't have to pay anything
If you pay the rates and the tenant doesn't pay rent you lose out twice! No rent and you have to pay rates!
I think the RICS might do a standard lease, fairly sure I saw one the other day, but get legal advice, it could save a world of pain in a few years
If the units are small and let to a small business chances are they won't have to pay anything
If you pay the rates and the tenant doesn't pay rent you lose out twice! No rent and you have to pay rates!
I think the RICS might do a standard lease, fairly sure I saw one the other day, but get legal advice, it could save a world of pain in a few years
There is a standard law society lease format, and I've seen lots of people get into trouble not understanding which terms to change, and what afect others have on the lease and value.
You say it's not worth it - but £2k a month is £24k a year - a rough and ready valuation (based on 7%) £342,857.
Get a solicitor to draw up your leases!
You say it's not worth it - but £2k a month is £24k a year - a rough and ready valuation (based on 7%) £342,857.
Get a solicitor to draw up your leases!
surveyor said:
There is a standard law society lease format, and I've seen lots of people get into trouble not understanding which terms to change, and what afect others have on the lease and value.
You say it's not worth it - but £2k a month is £24k a year - a rough and ready valuation (based on 7%) £342,857.
Get a solicitor to draw up your leases!
Without doubt get a solicitor to draw up the leases. I’d also appoint a commercial agent to manage it too. The further you are away from the tenants, the better in my experience.You say it's not worth it - but £2k a month is £24k a year - a rough and ready valuation (based on 7%) £342,857.
Get a solicitor to draw up your leases!
OP, I suggest you also consider who is to repair the outside of the buildings. I.e. is it the landlords responsibility or the tenants? - this will have an impact on what rent is charged etc. and a good local commercial agent will explain the difference it has on the rent receivable and ideally you want the tenants to pay “quarterly in advance” as this eases the management time as they should only be making 4 payments a year.
Gassing Station | Business | Top of Page | What's New | My Stuff