Finding a Tenant for a Vacant Commercial Property
Marketing business premises for letting
When a landlord has a vacant property, or one that is about to become vacant, he will need to appoint a letting agent to market the property and attract a suitable tenant. The agent will advise on strategy, handle negotiations and ensure that legal requirements such as the provision of an energy performance certificate are dealt with.
Agreeing terms with a potential tenant
Once a suitable tenant has been found heads of terms should be drawn up. These are designed to ensure that the landlord and tenant agree all significant points of principle before attempting to agree the wording of the lease. The Heads of Terms are likely to record what has been agreed as regards the lease term, amount of rent, break rights, assignment and underletting and repair.
At an early stage the tenant needs to investigate the tenant’s financial position to ensure that it will be capable of paying the rent. The landlord (or the landlord’s agent) should ask to see audited accounts and information about the company’s management and trading history. References from the tenant’s bank and/or a previous landlord and/or a character reference could also be sought.
If the landlord has concerns about the tenant’s financial position, it could require the tenant to provide security in the form of a rent deposit or one or more guarantors. Any guarantor should be vetted in the same way as the tenant.
Obtaining third party consents
If the landlord has a mortgage affecting the property, the lender’s consent may be required to the grant of the lease. If the landlord is itself a tenant of the property, there is likely to be a requirement to obtain the consent of the superior landlord.
Applications for these consents should be made at an early stage. The mortgagee and/or superior landlord should be given as much information as possible about the proposed letting to enable them to make an informed decision on consent.