Your available funds will have been a factor in choosing whether to rent or buy your commercial property. But let’s now assume you are planning to rent. What costs do you need to budget for?
There are a number of costs that a tenant is expected to cover, not just the rent! Some may be one-offs – related to your initial occupation – and others regular, ongoing charges.
One good tip is to make a cash flow table to show which charges fall due when, so that you can budget properly throughout the year.
Typically the costs involved in renting commercial property may include:
- RENT – The rent is normally paid quarterly in advance, although it may be possible to arrange monthly payments if preferred.
- VAT – This will be applicable if the property is VAT registered and is reclaimable if you are also VAT registered.
- BUSINESS RATES – Business rates are a tax based on the rateable value of the property and the level of the uniform business rate (UBR). They are the responsibility of the tenant and are paid direct to the local council. The landlord may be able to provide information on current rates, or these can be obtained from the council directly.
- UTILITY BILLS – Gas, Electricity & Water. As you would expect, the cost of these items will depend on your usage.
- SERVICE CHARGES – If service charges apply these are typically invoiced separately to the rent. Service charges cover the actual costs to maintain the common areas of the site, e.g. the service road, lighting, security, and a proportionate share of the costs of repair or redecoration of the building.
- INSURANCE – Stour Valley Estates will insure the building on your behalf and pass the cost on directly to you, the tenant (you should check that other landlords do the same). You will be responsible for arranging and paying contents insurance.
- LANDLORDS LEGAL COSTS – The tenant is generally responsible for these costs – you should ask for an estimate once you agreed all of the other final details of your lease.
- AGENCY FEES – If you are using an agent rather than dealing with the Landlord direct you will expect to pay about 10% of the first year’s rental in agency fees.
- CONSTRUCTION & ALTERATION – If you need to make changes to the layout or to the décor of the property to suit your business needs you will generally need to pay for these yourself.
Just to be sure, when you are speaking with a prospective landlord it is worth asking the question directly: “Are there any other costs that I will be responsible for?” Then you will ensure that there are no surprises as your negotiations progress!
More details on the Stour Valley Estates business parks and our other commercial properties to let can be found on this website, or by phoning our Property Manager Katie Dove on 01304 849210.