If you haven’t leased a commercial property before, or have had a bad experience with a previous tenant, it is important to be able to trust that the person you have moving into your commercial property is going to abide by the rules set out in your tenancy agreement. This should include rules around late payments, noise and any damage to the property, which are common causes for landlord and tenant disputes.
To ascertain whether a new tenant is likely to be reliable, try asking them the following questions, before you sign a lease agreement:
Have you rented a commercial property before?
If the answer to this is yes, then see if you can visit their current premises to get an idea of how they treat the property that they work in. Also, request references from current and previous commercial property landlords.
What are the reasons for your move?
People move to a new commercial property for many reasons. They could be expanding or changing location, or they could be trying to secure a more cost effective rental agreement. In the worst-case scenario, they could be leaving due to a dispute with a current landlord, which may be a slight warning sign.
Have you ever been evicted or had problems with a previous landlord?
This isn’t the type of information that someone is likely to just offer up, so encourage being open and honest with each other by being direct and asking for an honest answer to this question. If the answer is yes, see if the tenant is forthcoming with an explanation.
When would you plan on moving in?
Find out if there is a concrete date, or if there’s a likelihood that your new tenant could delay their move date, leaving you with an empty property for an undefined amount of time. Your next question should then be to ask whether they would have a security deposit and first month’s rent available by then. If they’re in a rush to move, you should also find out why in case there’s an issue where they are currently.
What is cash flow like?
Be upfront about the fact that you will need guaranteed payment by a certain date each month and ensure that they will be able to afford to pay this every month, on time.
How long would you want the property for?
If you’re looking for a long-term let so that the property is making you money without you having to go through the rental process again relatively soon, make sure that your tenant is happy to sign an agreement for a few years rather than a few months. Similarly, if it works out better for you to review what you want to do with the property after 12 months, then make sure that the tenant is aware that this would be the initial length of the lease.
What do you plan on using the property for?
This is an extremely important question to ask. Firstly, you will need to ensure that the commercial property is legally fit for use for whatever your tenant chooses to use it for. For example, an office space would not be suitable as a welding workshop and if anything industrial is being carried out in a property that is not suitable for use, then damage is highly likely to occur.
Will you be bringing in specialist equipment?
Similarly, if your new tenant intends to install machinery or equipment or will be carrying out any activities that could damage the property or its surroundings, it’s best to be aware of this so that you can either prohibit it, or assign spaces where it is preferable and safer for these sorts of activities to take place.
Would you wish to make any changes to the property?
It’s surprising how often a landlord won’t ask this question, only for the tenant to find out that they want to take down or erect a partition wall once they’re all moved in. See whether this is going to be likely before the tenant moves in, so that you don’t have to disappoint them at the start of their tenancy if you’re not happy to permit any changes.
How many people will be working here?
This is an important question for considering wear and tear to the property, but also to its surroundings. If the property is located somewhere with a set amount of parking which is shared by other businesses or even local residents, then lots of employees driving to work could become a problem.
Would you like to ask me anything?
Be prepared for any questions that a prospective tenant may want to ask you and encourage them to be open with anything that they’re uncertain about. If you are able to communicate well at the start of the tenancy, it bodes well for the rest of your landlord and tenant relationship.
How not to vet a prospective commercial property tenant
The worst thing that you can do is to take someone else’s word for their friend, associate or candidate being a good tenant. Unless it’s a valid reference from a current or previous landlord, do your own research to make sure that you’re happy with the company and the person that you’re letting your commercial property to.
Advice about letting a commercial property
For advice about letting your commercial property to new tenants, speak to a commercial property specialist. We don’t just make sure that your lease agreement is watertight, we’ll help to guide you with general best practice too.
Speak to specialist commercial property solicitor
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