How much does commercial conveyancing cost?

Just as with buying a home, there are a number of costs associated with acquiring commercial premises. As well as solicitors’ fees, you may have to pay for surveys, searches, land registry fees, stamp duty (payable at the same rates as on domestic property) and VAT.

Do I have to pay VAT when I buy or rent commercial premises?

This will depend on whether the seller or landlord has waived their exemption from VAT. If they have, VAT will be payable on top of the purchase price or rent – but can be recovered if your own business is registered for VAT.

Are there any hidden costs of being a tenant?

As well as rent and business rates, a tenant will usually have to pay towards insurance, maintenance and (if part of a larger building) a shared service charge. It’s vital to check the financial commitments in the lease carefully for any charges whose value is not clearly defined: if raised arbitrarily, such charges can have a serious impact on your cash flow.

What happens if I want to get out of a lease?

This will depend on the terms of the lease. However, generally speaking, you have four options:

• Terminating under the terms of the lease – either through an agreed ‘break’ clause, or because the landlord is in breach of their obligations.
• Negotiating a termination. This will be at the landlord’s discretion: he or she may decline any proposal you make – however, if your business would be adversely affected, the landlord may see an early termination as being in their own best interests.
• Sub-letting all or part of the premises.
• Assigning (selling) the lease to a new tenant.

Can landlords prevent tenants from sub-letting or selling the lease?

Only if there is a clause in the lease which specifically restricts a tenant from doing this. Most leases include some kind of restriction: usually to prevent part of the premises being sub-let, rather than the whole. They often set out possible grounds on which a landlord might refuse consent (for example, if the new tenant is not of equal financial standing).

Bear in mind that, if you do sub-let, or even assign the lease, you may still be liable to the landlord for rent and other payments due under the initial lease.

How do I know the rent won’t go up once I’m committed?

The lease agreement should include provision for rent reviews – usually, every three to five years. However, the basis for calculating rent reviews can vary, so it’s important to be aware what you’re committing to. Some leases link any increase in rent to the increase in Retail Price Index, or inflation. Others are based on the prevailing market value – which is clearly more open to interpretation.

Can I challenge the landlord’s rent review?