As you already know, you have to pay a specified amount of money to the property owner when you are using the space. Understanding the elements of commercial rental fees is crucial to find the best commercial property for sale London.
With prices crossing 2000 British pounds per square foot, the West End of London ranks first in terms of high rental costs. So, let us get started with assessing the prevailing factors for the rent of commercial properties in the UK.
Methods To Calculate Rent
Calculating the rent for a commercial property is different from how you calculate the rent for residential properties. So, here is a guide to offer clarity on different kinds of methods for rent calculation.
- Monthly rent: To get the rent for a particular month, you have to divide the yearly amount by twelve. This calculation suits small-scale businesses, especially the newer ones that have recently started operating.
- Yearly rent: This method involves the multiplication of each unit of usable and available square feet. Bigger firms prefer this model to make the payment right away.
- Percentage rent: In this model, the property owner has the right to a stipulated portion of the profits from the tenant’s business. In addition, property owners enjoy a base rental value above a particular amount.
- Usable square feet rent: This method is quite common among owners and tenants. Here, the total area that the tenant uses for his business determines the final payable rent. The kind of business and associated factors help in working out contracts related to the base rental rates.
Factors Impacting Rent Of Commercial Properties
Do you know the aspects that determine the rent of a commercial property? These factors are as follows:
- Location
- Structure of the lease
- Office fit-outs
- Market trends
- Superior amenities
Costs For Tenants Of Commercial Properties
While renting a commercial property, you must consider the following expenses.
Rental Deposit
Often, property owners require a rental guarantee in the form of a cash deposit into a locked account. When the tenant fails to comply with the obligations, the landlord may draw against the locked account.
You must clear rent and associated payments in time to prevent substantial additional charges.
Costs For Business Operations
The rental value is a key determinant of business rates. Such valuations receive revisions in frequent intervals under the supervision of the Valuation Office Agency (VOA).
Deposits And Taxes
Other costs that you may have to pay along with the rent include a deposit money equal to the rent for three or more months. If the property has a VAT, it will cost you the amount on different service charges. Also, Stamp Duty Land Taxes are payable on most commercial properties.
CAM Charges And Its Elements
Generally, the major charges for maintaining common areas in commercial properties are covered by tenants. Notably, the structure of the fees depends on the property and its owner.
While the owner benefits from the Common Area Maintenance (CAM) charges, it can have adverse effects on a tenant’s business due to surging expenses. Nevertheless, there are a few exceptions to this issue. It implies that CAM charges can help tenants to keep up with repair work since they are paying for it.
Here are the components of CAM charges.
- Upkeep of the parking lot– It includes costs related to resurfacing, repainting, repairing fissures, and maintaining lights in the lot.
- Snow removal- The amount of snow in your location decides the rate.
- Landscaping– Lawn care at frequent intervals involves costs of fertilizing, mowing, planting flowers, removing weeds, etc.
- Elevators– If the property is a multi-level one, it will consist of elevators that require maintenance from time to time.
- Sidewalks– It is vital to ensure safety as well as easy accessibility.
- Hallways and shared bathrooms– A commercial property with shared bathrooms needs a lot of supplies in stock. It applies to hallways that should be clean and presentable.
- Utilities like gas and electricity– These staple amenities are essential for operating your business and other functions on the property.
In addition, some require you to pay for property taxes, insurance, city permits, and administrative expenses.
Wrapping Up
In conclusion, keeping an affordable budget in mind is crucial when you wish to rent a commercial property. It will allow you to prevent an unpleasant financial situation in the long term.
