Here at Boxpod, we love finding the perfect match between landlord and tenant. Whether you are a commercial property landlord – perhaps with an office space, warehouse space, or retail unit to rent out, or are a business looking for their ideal premises – a workshop in the centre of town, or an industrial space close to a port, we aim to connect you.
We have a wide range of different commercial properties across all types, but often our tenants are small businesses either looking for their first rented premises, or an established, larger business that is looking to expand or streamline.
Regardless of the type of business you are, when you are considering moving into a new commercial property, one of the biggest things that you need to think about is the financial side of it. You need to be able to afford it and make it financially work for your business.
Whilst running a small business from home can have benefits such as savings on rent and less of a commute, there are many more benefits to running it from a separate building – you will have more space to expand, be able to separate your work and home lives easier and will look more professional as a business – amongst others.
We recommend that you calculate how much you can afford to spend on your rent before you start to look for premises. In addition to the rent that you will be required to pay, there are also other financial commitments that you will need to take into consideration.
Rent
Rent is likely to be the highest cost that you will need to pay when you are leasing a property. You will be required to pay on a regular basis. If you have a small or new business, there is the possibility that you will need to provide a guarantee for the rent payments on your commercial property.
You should also bear in mind that there might be rent reviews if you are planning on staying in the commercial property for a long time (typically after two, three, or five years). This rent can go up and down depending on the lease that you agree to.
Business Rates (England and Wales)
Business rates are another important cost consideration that you should bear in mind when you are looking to rent a commercial property in England and Wales (Scotland and Northern Ireland have different arrangements). Business rates are a specific kind of tax that is normally paid by the tenant.
The business rates that should be paid are calculated by the combination of the rateable value of the property (roughly equal to its rental value on the open market) and the uniform business rate amount. There can, however, be other subsidies added to this value. It is also useful to be aware of the fact that some businesses can apply for a business rate exemption.
Business rates are charged annually and invoices are sent to you directly.
Service Charges
It is possible that you will be charged a service charge in some commercial properties. These charges can cover anything from the cleaning and maintenance of communal areas to any repairs that are needed and gardening costs. It is important to check with the landlord whether this service charge is included in the rent or added to it before you make the decision about moving to the commercial property.
Insurance can also be added to or included with the service charge fees, so check this with the landlord as well before agreeing to go ahead with the rental of the property.
Energy
Energy is a bit of a can of worms in the world today. It can be difficult to predict how high your energy bills are likely to be, but the law does help you a little. When a new tenant moves into a commercial property, the landlord is required by law to provide them with a valid EPC (energy performance certificate). This certificate is a document that is produced after an inspection by a qualified surveyor, and on the document, the energy efficiency of the property will be accurately outlined.
With this information, you can get a good idea of the potential cost of your energy bills inside the property.
Professional Advisors
Some people choose to take professional advice from advisors or solicitors before they rent a commercial property. These tend to be larger businesses, but if you decide that you should use their services, this is another cost that you will need to factor in.
Local Authority Charges
There are several possible Local Authority charges that can be added when you are renting a commercial property. These can include services such as bin collection and parking, but also factors such as congestion zone charges and likewise.
Cleaning Costs
Depending on the size and nature of the workspace, you might also wish (or need) to pay for regular cleaning. Of course, this is down to your discretion, but it has been proven that clean workspaces result in more productive work, as well as it helping to protect the property that you are renting.
Deposit
In many cases, you will be required to pay a deposit on the commercial property. This is usually equivalent to one, three, or six months’ rent. Of course, the deposit will be returned at the end of the lease – some or all of it is used to make repairs or carry out any cleaning that is needed.
Final Thoughts
Whether you are a small business that is looking for its first premises, a growing business that is looking to expand, or your existing lease is up for renewal and you want to move locations, there are many reasons why renting a new commercial property is an excellent idea.
As with anything in a business, however, it is important to be across all of the details – including the costs before you make any decisions. This article is here just for that, to help you make the best decision for you, and get you into the best commercial property for you.
If you are a commercial property landlord or are searching for one for your business, take a look at what we have here at Boxpod, and find your perfect match!
Looking to expand or grow your business? Find your perfect space on Boxpod.
Do you own or manage commercial space? Advertise it on Boxpod.