With a leasehold property you purchase the right to use the property for an agreed period of time and are bound by the conditions of the lease. Most leases will require you to maintain the property at your expense; pay either a monthly, quarterly or annual rent payment; insure the building against damage, fire etc.
Whether your property is leasehold or freehold you will also be required to pay business rates. You will also have to pay to have the property surveyed and the solicitor’s fees for the new lease. It’s also common in the case of a leasehold property (not that you have to agree to it) for the landlord to put it as part of the contract that you pay all their `reasonable legal costs’ in negotiating the new lease.
Questions you need to ask yourself before deciding on a property
- Location. Is the shop located in an area where my target market is?
- History. What’s the shop’s history? What was the previous tenant’s business? Have they relocated close by or gone out of business?
- Crime. Is the area prone to vandalism, burglary and does it become a virtual no-go area at night? How close is it to pubs, clubs and late night takeaways?
- Size. Look at size from the long term. What’s the possibility of expanding your business? Be realistic here; some shops are about the size of your average ensuite. Can you really fit everything in? Forget about the great rent for a minute and look at it objectively.
- Area. You should always pay particular attention to what’s happening in the area local to your business. Is it on the up with new businesses coming in? What are the plans for new housing? Is there already a business similar to the one you’re planning to start?
- Above and beside. What sort of accommodation exists above and alongside your proposed shop? Most high street shops have some sort of accommodation above them which often is rented out, which isn’t a problem if the tenants are OK. But what if they’re not? How would that impact on your business?