As a commercial landlord, you may have different priorities when letting a property, but the focus will always be on ensuring the long-term security of your investment.
That is why we have compiled our top tips for letting out a commercial property, to ensure your investment is secure and to mitigate against any potential complications.
Request security
In order to ensure that your lease is protected, you can request a guarantor for the tenant. If your prospective tenant is a company, then you can ask directors for a personal guarantee, in order to ensure that the company can mitigate the risk for you.
If this is not possible, then you can request a rent deposit, which is usually at least three month’s rent.
Assess potential tenants
Prior to entering a lease agreement with a tenant, it’s vital that you thoroughly assess them. While it may be frustrating to not have a tenant, it is important to ensure that there will not be any issues in the future.
Knowing that your tenant has the funds to pay the rent, as well as cover their repairing obligations in the lease will ensure that your asset is properly protected. The standard recommendation is to ask for a bank, previous landlord and two trade references if they are available.
Define break clauses
Tenants are sometimes keen to ensure that a lease has a ‘break clause’ to allow them to exit the lease should their circumstances change. While this is not always advantageous for landlords, it’s important to be aware of them.
Some tenants will value a break clause highly, and as a landlord, you should price the risk of an early break in the lease contract into the rental value.
Ensure compliance
It’s pivotal that you ensure that your commercial property meets the relevant regulations, including asbestos management, fire safety and energy performance requirements.
This is not only a legal requirement, but also makes your property an attractive prospect to tenants as it will speed up the process at the beginning of the tenancy.
Seek expert advice
Before engaging in a contract with prospective tenants, it is prudent to seek expert legal advice. A lease can take effect for a long time, so it’s important to receive guidance and advice to prevent complications further down the line.
For help and advice with matters relating to commercial property, contact our expert team today.