Top Tips for acquiring your Commercial Property
Monday 8th April 2019
Enquiring with your seller or landlord as early as possible is key and taking advice from a lawyer will also ensure the information provided is satisfactory for you to sign on the dotted line.
Your negotiations will depend partly on market forces – which could give either you or them the upper hand – but being as informed as possible will help you secure a positive deal. Here are my top tips on what manufacturers should look for.
1. Planning
On day one, the seller/landlord should supply a copy of the planning permission authorising your proposed use of the property. If the current permissions don’t cover your intended use, then a new application will be needed, causing delays.
Planning permissions often come with conditions. Make sure that the permissions match with your requirements for hours of use, delivery times and restrictions on noise, lighting and external storage. If the conditions don’t meet your needs, this will prevent you from running your operation as you wish.
They should also provide you with evidence that the conditions relevant to the building’s initial construction have been satisfied.
2. Statutory compliance
The seller/landlord must comply with various statutory obligations, and if they don’t then this may cause delays and extra costs for you. There are five key areas to check for compliance.
Firstly, an asbestos report should be thoroughly checked. The best type is a full refurbishment type report, but management surveys are normally supplied. These need checking and care given to any areas not surveyed and limitations generally. It may be that a new, more detailed survey is required.
Secondly, an EPC certificate will need to be supplied. This will set out recommendations for works which may be needed to be carried out. Obviously, this may have a cost consequence for you as the new owner/tenant. Thirdly, the seller/landlord on a new build, or where a property has been refurbished, should supply you with a building regulations completion certificate.
Fourthly, the owner/landlord should be asked to provide a fire risk assessment to show their compliance, particularly where cladding is present. Finally, initial installation and test certificates should be provided for all electrical installations, gas installations, emergency lighting and lifts if applicable.
3. Establishment of ongoing costs
You need to identify any extra costs which maybe applicable, such as service charges. This may be relevant even where you are buying the property, for example, where it is on “a private estate”. In addition, if you are leasing, ask your landlord about how much they are going to charge for insurance and how much the business rates are so you can include it in your costings.
4. Building condition
Have the building surveyed so you understand its condition, including plant and utilities. Also ask if the building has flooded in the past, as this will affect the level and availability of your insurance.
If the premises are newly built, then you will need to obtain a list of all guarantees and warranties, available. These will be needed to cover the remediation of any defects going forward.
5. Lease terms
If you are leasing, when negotiating the terms with the landlord, there are many elements that should be thought out. Below are a number you should consider:
- Break option – if there is a tenant’s option to break, then there should be no conditions attached to this. Landlords will seek to impose conditions such as payment of rent and the observance of covenants. These conditions should be avoided as otherwise any non-compliance, even if minor, will frustrate the break.
- 54 Act protection – you should include this as otherwise, at the end of your lease, you will have no rights to remain in occupation, will be left with relocation costs and will have lost all of your initial set up costs.
- Service charge – if there is to be a service charge, you should look to have this capped. In addition, any costs should be fair and reasonable as otherwise you are giving the landlord an open chequebook for costs.
- Repair – unless the property is a newbuild, you should always look to limit your repairing obligation by reference to a scheduled condition, as otherwise you may again be giving the landlord an open chequebook for the costs of improving the condition of the premises at the end of the lease.
- Landlords obligations – you should look to impute on the landlord, under the terms of the lease, obligations to deal with asbestos, comply with energy performance requirements, take on any environmental contamination risks, and remediate any ‘inherent defects’ as they arise as otherwise these may be required at your cost.
