It is sometimes thought renting conventional office space is the same as renting a residential property. As a result, many find themselves out of budget as they fail to factor in all the additional costs which need to be included.
When moving into a new office the initial costs can quickly add up. A tenant will often be expected to pay a rent deposit, which Is often in the region of 3 to 6 months’ rent depending on the strength of the company’s accounts. The offices are often not fitted out and often not in a condition to be occupied straight away. The incoming tenant should not expect to be allowed to fit-out the office until the lease has commenced, so they will need to consider what works need to be done and how long it will take. Depending on the condition and required specification the incoming tenant may wish to install meeting rooms, kitchenette, server, cabling, internet access or any other services or facilities. Often this may require a License for Alteration, which will be another additional cost that needs to be accounted for.
Many try cutting their ‘move-in’ costs by not instructing an agent or a solicitor to work on their behalf. Cutting professional fees however often comes back to haunt the tenants as they can end up agreeing to a lease much more in the Landlord’s favour. This can leave the tenant exposed to additional costs or obligations that they would have otherwise avoided.
Once the lease has begun the tenant should be aware that it is not solely the rent they have to budget for. Other costs that may be included could be;
- Contribution towards Service Charge for the building’s management. This can vary depending on the level facilities and services within the building. These can include lifts, reception or air conditioning.
- Contribution towards the Building insurance
- Contribution towards a Sinking Fund to cover any additional works that would not be covered by service charge or insurance.
- Business Rates Tax
A tenant must be aware of the terms within their lease, as may need to take professional advice and prepare for a future increase in costs. This may include a rent review, which often which often surprise tenants if they are not prepared for an upcoming review. In a Full Repairing and Insuring lease, the Tennant is responsible for keeping the property in a good state of repair. This can leave the tenant liable for expensive repairing obligations if the property falls into poor condition.
At the end of the tenancy the tenant is normally responsible for returning the office back to its original state. If this is not completed by the tenant before they vacate the premises they may remain liable and be forced to cover the Landlord’s costs of doing the works themselves. This can be expensive as the tenant will lose control over the cost of the refurbishment works. If they are moving into new offices at the same time this can become very costly!
If you require further assistance with renting an office, please do not hesitate a member of our team.