Subletting a building from an existing tennant
Discussion
Hi All
I am about to take on the lease of an industrial unit from its existing tennant. I have always worked from home so this seems a big step. The existing tennant has relocated and has a year to run on the current agreement. Rather than them pay the rent on an empty building for another year I have agreed to take the building on.
I will be paying rent to the tennant and they in turn will pay rent to the landlord. They have also asked for a months rent as a deposit.
My only concern is that should the tennant go out of business I will in effect loose the building and my deposit as my agreement is with them and not the landlord.
Should I therefore suggest that the landlord hold the deposit, or am I being too cautions about what is actually the standard way of doing things?
I am about to take on the lease of an industrial unit from its existing tennant. I have always worked from home so this seems a big step. The existing tennant has relocated and has a year to run on the current agreement. Rather than them pay the rent on an empty building for another year I have agreed to take the building on.
I will be paying rent to the tennant and they in turn will pay rent to the landlord. They have also asked for a months rent as a deposit.
My only concern is that should the tennant go out of business I will in effect loose the building and my deposit as my agreement is with them and not the landlord.
Should I therefore suggest that the landlord hold the deposit, or am I being too cautions about what is actually the standard way of doing things?
You are subletting a unit so you will most likely need consent from the landlord for this to go ahead. Has the landlord been approached in this respect?
How long will you want to take the unit for? Is it worth entering into an agreement with the landlord directly, e.g. a new 5 year lease?
How long will you want to take the unit for? Is it worth entering into an agreement with the landlord directly, e.g. a new 5 year lease?
You could always ask for the deposit to be put in a special nominated bank account. If it's not too much money don't fret too much.
Have you looked at repair. Make sure that you are not going to be liable for any disrepair either with the repairing clause in the lease or a Schedule of Condition.
Have you looked at repair. Make sure that you are not going to be liable for any disrepair either with the repairing clause in the lease or a Schedule of Condition.
As David says the Dilapidations bill at the end of the lease could cause the loss of your deposit to pale into insignificance!
The other point I would make is what happens in a years time? Do you ahve the right to renew the lease? If not the Landlord will have you over a barrell, and will be able to seek a very high rent knowin your only alternative is to move again. If your lease was protected under the Act at least you'd have the protection it offers.
The other point I would make is what happens in a years time? Do you ahve the right to renew the lease? If not the Landlord will have you over a barrell, and will be able to seek a very high rent knowin your only alternative is to move again. If your lease was protected under the Act at least you'd have the protection it offers.
Theres loads of different scenarios to look at but what comes to mind is what are the terms of the lease. Are you signing a lease, or is this an informal agreement where you pay rent and they let you move in. If you look at the head lease there is every chance that they aren't actually allowed to move in. Also, as mentioned, based on the circumstances you have no protection so once the year comes to an end, the actual landlord is within their rights to rent to somebody else and kick you out. Another alternative to this is that if your business is location based and you have established your business where it is, then it puts you on bad grounds to argue for a better deal.
Is the rent actually really cheap. How are you sorting out the insurance etc. What about the condition of the building. Most lease's will have written in that they must be returned in the condition that they are found etc. Make sure you don't have this passed onto you if you do sign a lease considering the other company have been in there for x amount of time.
There are advantages though. I would assume you won't have to tie yourself into a long lease for X amount so it allows you to lease whenever you want. You can probably negotiate a better rent too.
Just my two pence. I'm sure someone who does this for a living will come along soon.
Is the rent actually really cheap. How are you sorting out the insurance etc. What about the condition of the building. Most lease's will have written in that they must be returned in the condition that they are found etc. Make sure you don't have this passed onto you if you do sign a lease considering the other company have been in there for x amount of time.
There are advantages though. I would assume you won't have to tie yourself into a long lease for X amount so it allows you to lease whenever you want. You can probably negotiate a better rent too.
Just my two pence. I'm sure someone who does this for a living will come along soon.
Assuming the company letting to you want rid before the end of their 5(?) year contract, is it not just worth them telling the landlord they don't want it but you'll take it on for the remainder of their contract. Landlord doesn't lose out, existing company end their contract without loss and you have new premises? Or does it not work like that? 
AyBee said:
Assuming the company letting to you want rid before the end of their 5(?) year contract, is it not just worth them telling the landlord they don't want it but you'll take it on for the remainder of their contract. Landlord doesn't lose out, existing company end their contract without loss and you have new premises? Or does it not work like that?
It would mean potentially taking on all breaches of repair. If covenant is not as good landlord may not be keen. However it may be possible to agree to surrender existing lease if you are to take out a new one at the same time. Gives OP potential to go beyond the one year which can be useful. Owner of building obviously has to agree.Gassing Station | Business | Top of Page | What's New | My Stuff