How to manage a change in business tenancy

30 November 2016

Is your business moving to another rented commercial premises? You can get the help and advice you need to make the change in tenancy process as hassle-free as possible right here.

If your business has outgrown its existing commercial space, and you’ve followed our advice on finding a new business premises, it’s time to start the change in business tenancy procedure. This guide outlines the practicalities you’ll need to consider before and after your move, so you can manage every stage of the process.

Types of property rental agreement

Depending on your business size and what you can afford, there are two options available when renting commercial premises. Below, we look at the main types of rental agreements available to businesses, and offer advice on things to look out for when agreeing to a certain type of contract.

Leasing

Leasing is the most common type of commercial rental agreement, and business leases generally have a term length between three and twenty-five years.

However, reports show that lease lengths are getting shorter, as business tenants seek greater flexibility from their commercial rental agreement. As of 2015, 73% of all commercial leases signed were between one and five years. 

Before agreeing to a specific lease term, make sure this is something your business and its stakeholders are happy with. If not, there may be room to negotiate a different lease length with the landlord.

Business tenancy

 

Other things to consider when signing up to a new lease contract include: 

  • Break clauses: This is a provision in the lease which gives the tenant or the landlord the opportunity to end the contract early. Tenants often use break clauses to re-negotiate their lease terms.
  • Service charges: If the premises let to tenants makes up part of a larger building or estate, the landlord will often apply a service charge to maintain and upkeep common areas.
  • Dilapidations: This term refers to breaches in relation to the overall condition of the property at the end of a lease, and the fees the landlord may charge to remedy any damage. Familiarise yourself with the possible dilapidations charges set out by the landlord before agreeing to a lease agreement.
  • Responsibility for maintenance and upkeep: Make sure you’re aware of the maintenance responsibilities attached to a specific property before agreeing to the lease.
  • Rent payment schedule: For commercial premises, rent is normally paid quarterly in advance. However, if this doesn’t suit your usual payment schedule, this is something to negotiate with the landlord.

Licensing

Moving into a licensed property is often quicker, easier and cheaper than moving into new premises on a leasing contract. And, thanks to the availability of one-year contracts, this type of rental agreement offers great flexibility for start-ups and other small businesses which may need to expand in the future.

Before agreeing to a licensing agreement, however, there are a few things you should know: 

  • Both the tenant and the landlord have the right to terminate at short notice: This offers great flexibility for the tenant, but does add an element of instability, with the landlord effectively able to end the contract without warning.
  • Tenants have no right to renew the contract: Unlike lease contracts, tenants have no automatic right to renew the contract once it has ended.
  • Check that the landlord has the right to grant licences in this way: A solicitor will be able to help you ascertain the credibility of a commercial property licence.
  • Check the agreement includes all of the services and facilities you’d expect: Licensed premises often come with a range of inclusive facilities and services, which you are not responsible for paying (parking, reception space, air conditioning etc.). Check that these things are included in the licence agreement.

Before you move

Planning for a move is often more important than the move itself, and there are a number of things you’ll need to do before your current rental agreement ends and your new one begins — which we’ve outlined below.

Get professional help with legal matters

When ending the agreement with your current landlord, and signing up to a new contract, you’ll no doubt be inundated with complex legal documentation that will need to be reviewed with care.

legal advice

To ensure you cover all bases with your previous landlord, and start on good terms with your new one, consider getting professional help from a solicitor. While this may be expensive, the repercussions of breaching a tenancy agreement can prove more costly. 

A solicitor will be able to help with ending the contract with your previous landlord, particularly if you are charged unfairly for dilapidations. They will also be able to review your new tenancy contract, and advise on any areas which you may be able to negotiate.  

Notify your energy supplier

If your moving date is set, you’ll need to contact your existing energy supplier to arrange for your contract to be transferred or cancelled. We’d recommend notifying your energy supplier a month in advance of your moving date, so that things go as smoothly as possible.

 

To make sure your energy contracts are transferred properly, and you’re only billed for the energy you use up until your moving date, you’ll need to provide the following information to your energy supplier: 

  • Your moving date
  • Your final meter reading (taken on the day you move, not during the initial notice period)
  • Your forwarding address, for your final bill and to receive a quote for gas and electricity
  • The contact details of the business moving into the premises after you, or the contact details of the landlord

You can click here to fill in a Change of Tenancy form online.

Repairs and maintenance

To avoid paying dilapidations charges, make sure you carry out any maintenance or repair work to restore the property to its original condition. Any modifications you’ve made to the premises outside of the rental covenant will need to be reversed so that the property meets the criteria laid out in the tenancy agreement.

If you don’t carry out the necessary repair and maintenance work, the landlord may charge a considerable sum to have the issue rectified. The subsequent dilapidations charges may be more than the cost of repairs. However, if you believe you are being charged unfairly for dilapidations, it is possible to raise a dispute, which is likely to end with court proceedings.

After you move

Once you’ve picked up the keys for your new premises, there are a number of things you’ll need to do to get your tenure off to the best possible start. 

change in business tenancy

Carry out fire and risk assessments

As a business tenant, it’s your responsibility to carry out comprehensive fire and risk assessments of your premises. You must develop a fire management and emergency plan right away, and make sure your staff are aware of the health and safety policy. Within the first week of occupying new premises, you should contact your local council who will send a fire safety warden to assess your property and help you devise the best possible fire safety policy and emergency action plan.

Contact the current energy provider

If the previous tenant has followed the appropriate moving procedure, you should receive notice from the property’s current energy provider, detailing what you need to do to start paying for your gas and electricity use. If no other arrangements are in place, you’ll be put on a deemed contract after giving the supplier an up to date meter reading, which may be more expensive than what you could be paying (you can find out more about deemed contracts, here).

If you aren’t happy with the deemed contract rate and would like to search for more competitive deals, why not get a business energy quotation from Gazprom Energy? You can apply for a free, no-obligation quote for gas and electricity using the links below:

Check the tenancy agreement before making alterations and improvements

If you’re interested in making structural or aesthetic alterations to your premises, make sure that these changes don’t conflict with the terms laid out in your tenancy agreement. Most agreements require the tenant to reinstate the property to its original configuration at the end of a tenancy term, so only carry out work that can be rectified in this instance.

The type of alterations permitted without the landlord’s consent depend on the length of the contract, and the planning regulations of the building. If you have a long lease on new premises and wish to make internal alterations, it may not be necessary to get consent from your landlord — unless the lease contract says otherwise. However, tenants should always get the landlord’s consent before carrying out major re-structural work.

At Gazprom Energy, our people are experts in helping businesses manage their energy contracts. If you’ve just moved into new premises and are searching for the best deals on business energy, visit our homepage to find out more about the products and services we offer, or call our dedicated team on 0845 230 0011.

The views, opinions and positions expressed within this article are those of our third party content providers alone and do not represent those of Gazprom Energy. The accuracy, completeness and validity of any statements made within this article are not guaranteed. Gazprom Energy accepts no liability for any errors, omissions or representations.



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