With the end of another tax year fast approaching, we’re sharing areas to consider as part of your tax ...
Vacant Space in 5 EASY STEPS
25 March 2020
Fortus Property Services, are here to help you maximise your space, and show you how to generate rental income from unused space.
So, where shall we start?
Firstly, do you have any vacant space?
Sounds simple doesn’t it? Do you have any space, that as the Tenant you’re not using? This could be a small room in an office, or an entire floor. If you’re a retail tenant, it could be that your shop floor is just too big for your current use, or you might have three floors of storage above your shop. Alternatively, you’re an industrial tenant and always thought that part of the warehouse could be cleared out? This could create valuable space to sublet and there’s no minimum requirement in terms of size.
Do you need your lease checked?
OK, so you’ve found some extra space, great! But what does your lease allow? Most commercial leases permit the tenant to sublet the whole or part of their demised space, subject to landlord consent, which generally can’t be unreasonably withheld. If you’re looking to exit the property completely, another option would be to assign your lease, this is also subject to landlord consent, again, and usually can’t be unreasonably withheld. If you’re not sure, your best option is to let us review your lease. This will allow you to then understand the different options available to you. If you occupy the building on a long leasehold, you’ll likely still need landlord consent. If you’re an owner occupier, so long as the proposed use is permitted, you shouldn’t have any issues.
And what about a sublease?
Let’s find you a sub tenant! This is more often than not the easiest option and can allow the sub tenant to benefit from more attractive lease terms. As the head tenant (Lessor), you’d still pay the head rent to the Head Landlord. However, you’d now also receive sub lease rental income. We could manage the whole process for you, from site inspection and preparing property details, through to managing the legal process through to completion.
Should you surrender and get a new lease?
It might be that you lease two floors in an office building but only occupy one. Whilst subletting could be an option, a more attractive proposition for you, as the tenant would be to remove all your liability for the surplus floor. This would involve a discussion with the landlord about a surrender of your existing lease of both floors to be replaced with a new lease for just the one floor you occupy. You may wonder why the Landlord would consider this? Well, it could be an opportunity for the landlord to secure a longer-term lease on the floor you occupy providing them with greater security. They may also welcome the ability to refurbish and market a vacant floor to generate an increase on the rents in the building.
Do you need to seek an assignment?
So, we’ve assessed your lease and your space requirements. Subletting simply won’t work and the Landlord isn’t interested in surrendering the existing lease and granting a new one. Don’t worry, you still have options! Securing an assignment of your lease means that once the deal completes, you’ll be free of any ongoing liability. An assignment will be subject to the landlord’s consent, however as mentioned previously, this generally can’t be unreasonably withheld.