Whether you want to move your business to a London office from abroad or from
another town or city in the UK – or if you live in the capital and you’re
looking to move into your first company headquarters, there are a many
negotiation points to consider. Whilst some of these are obvious – rent and
service charges, for instance – there are many factors that new and prospective
tenants often overlook when choosing a new office for themselves and their
colleagues. These points apply to all rented offices, large and small, so
before you put your cards on the table, take a look at this guide, which should
provide you with a good idea of what to expect when negotiating with commercial
estate agents and landlords:
London Office Rent
Rent is the most
obvious factor to consider. It is usually quoted in square foot per annum, and
is sometimes called ‘passing rent’. London office rental prices tend to be
higher than those in other cities in the UK, but it is an investment worth
making, thanks to the capital’s excellent transport links, amenities and
international prestige.
Rent Free Periods
Often, a landlord will
offer a period of time when the tenants don’t have to pay any rent, as an
incentive. Similar benefits come in the form of ‘reduced rent provisions’,
where you’ll still pay rent, but at a lower rate than the agreed ‘headline
rent’. Look around for these deals when renting a London office.
Service Charges
‘Service charges’ is
another way of saying ‘running and repair costs’. These are usually reviewed on
a year-by-year basis, and although the landlord is not allowed to make profit
from service charges, they will generally do everything they can to avoid
making a loss. Make sure you read the latest guidelines for service charges, so
you can be aware if you are being unfairly charged when you rent a London
office.
Lease Length
Negotiations frequently
begin with discussions about the length of the lease. There are no strict
guidelines that a landlord has to follow, and they are free to specify any time
period that they see fit for the lease. If you rent a London office, you’ll be
entering into a ‘landlord’s market’, where the landlord typically dictates the
terms of lease length and other important factors. For this reason, it’s
important to choose a commercial lettings agency that will act on its tenants’
behalf, negotiating with landlords for you on all important points.
IRI or FRI Lease?
An IRI lease stands
for ‘internally repairing and insuring lease, whilst an FRI lease means ‘fully
repairing and insuring lease’. FRI leases are more common, and allow the
landlord to offset building repair charges to tenants, either through the
service charge or through the tenants’ repairing obligations at the end of their
letting. An IRI lease limits the tenants’ liability for repair charges to the
office or offices which they use. If you are looking to rent a London office,
you can try to negotiate for an IRI lease, but they are far less common than
fully repairing and insuring leases.
There are many more
factors to consider, but hopefully these five should give you an idea of the
most important discussion points when renting a London office.
Overview
Five negotiation points to consider when
looking for a London office. These points will most likely be discussed when
you approach commercial estate agents in London.
