Small Business Hub
This guide takes you through the more common decisions and actions you may need to take – from acquiring a lease to challenging a dilapidations claim – along with vital property-related issues such as valuations, planning permission and the business rates system.
Though comprehensive, it is no substitute for the in-depth knowledge and advice a professional surveyor can provide, working in some instances with your lawyer or accountant. It should help you to appreciate when you need to call in the professionals and how to work with them.
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27 Jan 2016
A lease is a binding contract in law and signing a lease on a property is one of the most significant financial commitments that a business can make.
10 Aug 2015
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You would be advised not to buy a building without first commissioning a building survey from a chartered surveyor.
You are almost certainly liable to pay business rates if you occupy business premises.
Deciding whether to buy or lease your premises is not always easy as sometimes you will not have the choice.
Whether you are considering simple alterations, a more complicated refurbishment or extension or a completely new building, a chartered surveyor will be able to advise on all stages from inception to completion.
It can come as a nasty shock towards the end of a lease when the landlord requires extensive work from the tenant to remedy damage or disrepair or to put the premises back to its original state if the tenant has made internal alterations.
Your business will be easier to run - and more profitable - if you find the right premises, but unless you approach the search in a logical and organised way, and take advice where necessary, you risk overlooking some points which may turn out to vital at a later stage.
When problems related to your premises crop up, a good record-keeping system helps you to respond quickly.
A business needs to maximise its space. To have more space than you need imposes an unnecessary cost burden, but if your business is expanding you need to be sure that you will have adequate space when it is required.
If you intend to alter or extend your premises, carry out a different trade from the premises or even construct a totally new building, you face two important questions. Do I need planning permission? If I do, how do I obtain it?
Property costs are an important part of operating expenses for most businesses, whether you own or lease your premises. It is therefore vital to have a clear view of the outgoings relating to your property and of when the major items of expense will occur.
You need adequate insurance for your premises to protect your business. If you are a tenant, it is probably required by your lease. It is important to remember that buildings insurance does not usually cover disruption to your business, contents or stock which will probably need to be insured separately.
It can be a worrying and uncertain time for business tenants when a lease comes near to expiry but it can also be a time of opportunity. You may be able to renew the lease on better terms or you may be able to move to more suitable premises.
If you occupy your business premises as a tenant, the lease document may provide for the rent to be reviewed at intervals: normally every three or five years.
A systematic approach to disposing of property can minimise disruption and save time and money.
Particularly if you occupy only part of a larger building, you will probably have to pay – over and above the rent – a service charge to cover the cost of services that the landlord provides.
Signing a lease on premises means that you are probably entering into one of the most significant financial commitments that your business will make.
If your business is very young or a complete start-up, there might be advantages in occupying your premises under a licence rather than a lease. Property owners sometimes find it convenient to grant a licence, partly because the occupier will not qualify for ‘security of tenure’. Licences are usually for much shorter periods than a lease and do not require the same level of financial commitment.
There is no point in paying more tax than you have to. Some of your property-related spending may be allowable against your profits for tax; but this depends on the classification of the expenditure – a highly complex area where you really need the specialist advice of your chartered surveyor and accountant at the earliest possible stage.
There are many different reasons why you might need a valuation of a business property. You might need to establish the security for a loan. If you are thinking of buying, selling or renting a property, you might want an indication of the likely price. A valuation may be needed for incorporation in your accounts or in a propectus and you may need a figure for insurance purposes.
© RICS 2018
© RICS 2018