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Commercial Property Landlords Guide

How to Let Property?

It is important to understand what information tenants look for when they consider renting a commercial property. The principal points are suitability, location, rental and other associated costs. A range of additional information should be provided to prospective tenants, in order to secure an early letting (Planning Permissions, Business rates, Local Searches…) which we can advise on.
Lease
A lease usually is entered into for a fixed period of time. The main advantage of a long lease is to offer you long-term stability and security of tenure.

Break Clauses
A break clause gives both the landlord and the tenant, an option to give notice during the fixed term of tenancy. This can be inserted into the lease and can be very effective. Usually a period of notice prior to executing the break is required, typically three to six months.

Licence
With a high degree of flexibility offered, licences could be highly beneficial to start-up businesses, as it may not be possible to forecast sales volumes, activity levels and space requirements over a long term for a potential tenant. It could also be highly advantageous if you are aiming to let your property to a small business looking for short-term property occupations.

Commercial properties are covered by The Town and Country Planning (Use Classes) Order 1987, which divides the uses of business premises and land into different categories.

Use Classes Use Classes Description General Development
Order 1987 Order 1972 Order 1988
A1 Shops Class I Shops, retail warehouses, hairdressers, undertakers, travel and ticket agencies, post offices, dry cleaners, etc Pet shops, cats-meat shops, tripe shops, sandwich bars Showrooms, domestic hire shops, funeral directors No permitted change
– – – –
A2 Financial and Professional Services Class II Banks, building societies, estate and employment agencies Professional and financial services, betting offices Permitted change to A1 where a ground floor display window exists
– – – –
A3 Food and Drink Restaurants, pubs, snack bars, cafés, wine bars, shops for sale of hot food Permitted change to A1 or A2
– – – –
Sui Generis Shops selling and/or displaying motor vehicles Permitted change to A1
– – – –
Launderettes, taxi or vehicle hire businesses, amusement centres, petrol filling stations No permitted change
– – – –
B1 Business Class II and Class III Offices, not within A2, Research and development studios, laboratories, high tech Light industry Permitted change to B8 where no more than 235sqm
– – – –
B2 General Industrial Class IV-IX General industrial Permitted change to B1 or B8 B8 limited to no more than 235 sqm
– – – –
B8 Storage and distribution Class X Wholesale warehouse, distribution centres, repositories Permitted change to B1 where no more than 235 sqm
– – – –
Sui Generis N/A Any work registrable under the Alkali, etc. Works Regulation Act, 1906 No permitted change
– – – –
C1 Hotels Class XI Hotels, boarding and guest houses No permitted change
– – – –
C2 Residential Institutions Class XII and Class XIV Residential schools and colleges Hospitals and convalescent/nursing homes No permitted change
– – – –
C3 Dwelling Houses N/A Dwellings, small businesses at home, communal housing of elderly and handicapped (Six or less residents unless living together as a family.) No permitted change
– – – –
Sui Generis N/A Hostel No permitted change
– – – –
D1 Non-residential Institutions Class XIII, Class XV, and Class XVI Places of worship, church halls Clinics, health centres, crèches, day nurseries, consulting rooms Museums, public halls, libraries, art galleries, exhibition halls Non-residential education and training centres No permitted change
– – – –
D2 Assembly and Leisure Class XVII and Class XVIII Cinemas, music and concert halls Dance, sports halls, swimming baths, skating rinks, gymnasiums Other indoor and outdoor sports and leisure uses, bingo halls, casinos No permitted change
– – – –
Sui Generis Class XVII Theatres No permitted change

Planning Permission
A change of use application is relatively straight forward. Contacting your local authority is a good first step but you should bear in mind that local authorities can be extremely difficult to reach by telephone or ‘over the counter’.

An EPC informs the tenant about the energy performance of a property. It is a legal requirement for the landlord to provide a commercial EPC prior to your property being marketed. A commercial EPC is valid for ten years from the date of issue.

Although local searches are usually a tenant’s responsibility, some proactive landlords undertake them at their cost, in order to achieve a quicker and more efficient letting process. The searches should be no more than three months old as interested parties will not rely on documents that are outdated. The searches may include Radon Gas Search, Flood…
Next Property can advise you on the current recommendations.

It is your responsibility as a landlord to ensure the safety of your tenant. Your responsibilities include Gas safety, electrical equipment, fire alarms.
Next Property can advise you on the current recommendations.

Letting your property should be undertaken by appointing a professional Commercial Letting Agent. Next Property can represent you and help you every step of the way. There will be a fee should you appoint us to assist in letting but this could be money well spent if you are not experienced in letting property under a lease.
Once you have chosen a letting agent to represent and market your commercial property, it is important to make sure that your agent understands exactly what you are looking to achieve from the letting and is enthusiastic about it.

Once your property is being marketed, we will be able to maximize viewing opportunities by arranging viewings for you at times that suit you. Alternatively, you will need to provide keys and access to any security measures you have.
All offers received for your commercial property will go through Next Property Commercial, we are required by law to inform you about them. You are not obliged to accept any offers received. We will be able to formally advise you on offers and the merits of the same.
Any proposed transaction begins with drafting a document, which clearly states the primary terms that both parties have agreed to. This document is called the ‘Heads of Terms’ (HOTS).
A HOTS is not legally compulsory to produce but is recognized as a draft of the main points of the contract. This means that both parties will only be subject to the comprehensive agreements that are described within the main contract. When both parties agree the HOTS, the legal work can begin.

The HOTS can be a complicated task and Next Property Commercial will draw up the Heads of Terms. By using Next Property Commercial with our years experience, we can advise on the best Heads of Terms to put forward.

You are ready to exchange contracts with the prospective tenant of the commercial property. Until contracts have been exchanged, you can choose to let to another interested party unless a lockout agreement has been entered into.

Completion is usually one month after Exchange of Contracts.