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How is the price calculated for commercial premises?

On Behalf of | Jan 10, 2022 | Business Financing |

The difference between a profitable business and an unprofitable one can often be traced to underestimating the cost of things.

Commercial landlords do not all price the premises they lease in the same way. Two seemingly identical premised next door to each other could have vastly different costs due to each landlord’s perception of their property’s value. Or, one price could include much less than the other, making what looks like the cheapest of the two more expensive. Here are some things to consider.

What is included?

Ensure you understand who pays service bills, maintenance and repairs and whether prices include tax? Also, check if you have to pay a percentage of profit to the landlord on top of your rent.

When and by how much can the landlord raise the rent?

Make sure the contract stipulates a maximum rental increase. It could be set out as a percentage or as a set figure. Most rents rise yearly, although you may be able to fix a landlord to a price for longer.

If, however,  they agree to retain a set price for a certain number of years, check the sums. It may mean they worked out the overall amount they would get if they did increase the cost each year, then divided that by the number of years. In other words, you would end up paying the same in the long run.

Lease agreements are legal documents,  so getting help now to ensure you understand what you are signing reduces the chance you need help later to escape a contract you cannot afford.