New lease helps small businesses negotiate commercial property terms

Negotiating a lease is one of the hardest tasks facing any business seeking to acquire new commercial premises which is one of the reasons many turn to the advice of a profession property manager.

A wrong decision can have significant financial repercussions on the business which can be enough to threaten the business’s survival, especially in the current economic climate, and much care is needed from the outset to determine the implications of the lease.

Thankfully, small businesses will receive additional support in the New Year thanks to The Royal Institute of Chartered Surveyors (RICS), which is set to launch a freely available lease which aims to support small high street retail businesses.

The initiative, which has been drawn up in association with the British Retail Consortium (BRC), will simplify the leasing process for landlords and small business tenants and provide and easy-to-use contract making it clear to all parties the agreement being entered.

The lease will be aimed at small high street retail businesses and will be a stand-alone, short-term contract with no rent review or break clause. One of its biggest plus points is the fact it will provide a framework to stabilise property costs for small business starts up and more flexible terms for occupiers including a faster contract negotiation process.

Sourcing commercial premises can be an anxious time for businesses which have no experience of negotiating a lease. Businesses must consider whether rent reviews are reasonable and appropriately spaced, that the permitted use covers every area of their business, liability for repair and maintenance is reasonable and that lease duration provides security without tying down the business for an excessively long period.

Peter Knight, managing director of Manchester-based property and construction management company Knight Site Solutions Ltd, said: “Businesses need to be able to respond to their economic environment and changes in trading and the terms of a lease can dictate how easily this is achieved. Small businesses require flexibility to relocate if they outgrow their current premises while larger organisations may need the security of a long lease to protect their supply operation and any investment they’ve made in the building to create the perfect base.

“Leases are always in favour of the landlord but it is possible to redress the balance to protect your own position, especially in today’s challenging times where competition for tenants is strong.

“There’s a wealth of information available for businesses requiring help negotiating a lease. Alternatively, you can seek the services of a property management company to negotiate on your behalf and identify a solution that works best for your business.”

Property Aspects Magazine appreciates the contribution to this article from Property sourcing and management specialists Knight Site Solutions in Manchester