Why is my rent higher than my neighbour's when he has more space?
A common misperception is that if the rent on a shop is £15,000, and you occupy the adjacent shop which is smaller, then your rent should be less, right?  Well, no, not necessarily.  There are various reasons why your shop rent could be higher, as there are many variables to take into account, not just size.

Rent is calculated initially by reference to “Zone A”  which is intended to allow different size and shape properties to be compared on a £ psf basis.  If the adjacent property equates to £40 psf, then that figure will be used as a starting point to value yours.  However, then you have to look at:
 
  • Lease differences – the two properties may have completely different lease terms, and these can affect the value.  If a lease doesn’t give you the ability to assign or sublet if your circumstances change, then you have a very inflexible lease.  This would be worth less than a lease which did allow assignment or subletting.  Alternatively, one lease may restrict you to only using the property for a specific use, such as a jewellers, whilst another may allow you to use it for any retail purpose.  In this scenario the second lease would be more attractive than the first.
  • Property differences – If your property has a wide frontage, this may be great for your display purposes, but it is the most expensive part of the property in terms of rent, as the first 20ft back from the frontage is considered to be the most valuable.  Therefore a property that is wide but short will be proportionately more expensive than a long and thin property of the same square footage.
  • There are other considerations such as the shop layout and whether parking is included in the lease which can also impact on the rent.
  • Timing is an important consideration.  If the rent on the adjoining property was agreed some years ago, has the economic situation changed which will be reflected in rents?  Has the location within the town changed over time?
These are just a few of the considerations that will be taken into account by a chartered surveyor when they are advising you on what your rent should be.  The variables will change depending on the specific property and leases involved, so as you can see, it is not as straight forward as it may first look.

If you want to find out what your rent should be, please contact us
  
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Business Premises and Surveyors
Taking on business premises is an exciting time, but can also be daunting.  The right advice at the outset can save you costly mistakes in the future.  Most people wouldn’t think twice about using a solicitor to negotiate their lease for them, but what about a Chartered Surveyor?  Have you used one?  But why would you need someone in a hard hat using a theodolite, or the person that values your house for the mortgage?  What have they got to do with business premises?
 
  • Surveyors cover many areas, including those above, but one specialising in Landlord and Tenant work, such as rent reviews, lease renewals and property management can be invaluable to those leasing business premises.  A solicitor is essential whilst dealing with a lease renewal, but a surveyor should ideally also be appointed to work in conjunction with them.
  • Did you know that it may be possible to change the terms of the lease, or reduce the rent?
  • Has your solicitor advised you about the Lease Code and Service Charge Code, and the benefits these have for you?
  • Were you aware that if the landlord serves notice on you requesting you vacate the property (a "Section 25 notice") that you may not have to?
  • Do you understand all your obligations regarding repairing liabilities in the lease?  If you have a full repairing clause then you are responsible for carrying out all repairs necessary to the property – this could include significant items such as the roof.  Being aware of this at the outset allows you to budget accordingly, or negotiate to mitigate your liability.  You don’t want to sign up, move in and then find that two years later the roof needs replacing and it is now your responsibility.
 A surveyor is the appropriate professional to deal with a rent review, as they are experienced in valuing business premises and obtaining evidence to justify their claims, ensuring you end up with the right level of rent.

Of course the above applies if you are a tenant, but equally a surveyor can act for a landlord to ensure that the landlord’s investment is protected. 
People may wonder why they should appoint a surveyor when they can agree a deal themselves.  You use a solicitor, architect and accountant as they are specialists, so too is a surveyor.  Each has their own place.  Appointing the right professional frees up your time to allow you to concentrate on your business, and ensures you get the best possible agreement.  Don't just take our word for it, read some of our testimonials.
 
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