I’m always advising prospective tenants on leasing office space and even though the offices themselves come in all shapes and sizes in all sorts of locations, some of the legal problems are always the same. So, I thought it might be useful to jot down what I think are the ‘top 5’ points you should be considering before signing that office lease.
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Service Charges in Offices Leases
For some reason, landlords always seem to think that office tenants should pay for the cost of maintaining the structure of the building (like the roof and foundations) even if the poor tenant only has a three year lease at £8,000 per year. Depending on the circumstances it may be appropriate not to pay any service charges at all or at least agree a maximum amount the landlord can charge you. Treat service charge clauses with extreme caution.
Opening Times
Offices are often in an office block and it is surprisingly common to find that landlords will limit the number of hours and days you can trade. This is usually because the landlord does not want the hassle and expense of keeping the common parts open. Whatever the reason, make sure you can trade for all the hours you need and, if you can’t get rid of the restrictions, negotiate additional provisions for extensions of opening times.
Planning Permission and Offices Leases
People often assume that because office use is so common, the property must surely have planning permission for that use. On more than one occasion I’ve been informed by a client that there’s planning permission for office use because the property’s on the second floor (i.e. assuming that any commercial property above ground floor can only ever be used as offices!). This is, of course, nonsense. Always check that the property you want to lease has planning permission for office use. Never assume. Otherwise, the Council could close you down before you’ve even got started.
Repairs
Even if you’re going to be renting a ‘standard’ internal office space, never underestimate the cost of keeping the place in good repair. I was recently approached for advice by a poor office tenant who was in the process of leaving what looked like a normal 2,000 square foot second floor office space in not particularly bad condition. His landlord was suing him for over £40,000 for the cost of fixing alleged disrepair the tenant had caused. There are some simple measures that you can take to protect yourself from these sorts of claims, such as making sure that you don’t have to put the place in better condition than as at the start of the lease and evidencing this with a schedule of condition.
Fire Safety and Other Statutory Requirements
I occasionally receive phone calls out of the blue from tenants who have had a surprise visit from their local fire officer. The said fire officer has promptly decided that the property is a fire hazard and told the tenant that no one can occupy or use the property until about £30,000’s worth of alterations have been made to the property. The tenant is then shocked to discover that he is in fact the one responsible under the terms of his lease, to make sure the property complies with all fire regulations at his own cost. He then has the choice of carrying out the works or closing up his business. Of course, you won’t make this mistake, because you will carefully check and take advice on the adequacy of the fire safety measures and other statutory requirements, won’t you?
I’m afraid that the above points are only starters, albeit very important ones. There are a lot more crucial issues to consider before entering into an office lease. Do take the time to do your homework properly though. You could save yourself a lot of stress, time and money by doing so.
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