Whether it is acquiring a property, dealing with a rent review or complex dilapidations issues, many companies in Wales still believe they can save money by dealing with property issues themselves rather than paying for commercial property professional advice. However, making mistakes in the world of commercial property can prove extremely costly – A lot more than paying a professional for advice!
Businesses use solicitors to deal with legal issues on their behalf and accountants to deal with financial and tax issues on their behalf, so why don’t they use property professionals to deal with their property issues? Property is often the biggest business outgoing after staff, so in an age where minimising costs is just as important as increasing sales, not taking professional advice must be a mistake.
A research document published by the RICS found that UK b
usinesses could boost profits by 13% with the right property strategy. RICS small business spokesman, Ian McRae, said Property is a crucial business asset that needs attention and close management like any other yet it is often ignored in the boardroom and by small businesses who are always pushed for time. Good strategic property advice can allow a business to expand at the right pace, increase profit margins and make the difference between an enterprise that flourishes and one that struggles.”
Negotiating property deals usually isn’t a complex issue. However, in order to negotiate well, you must be fully aware of recent activity in the local market and this is where most businesses suffer. Many businesses are unaware of the details of recent transactions and believe that if they secure a property for less than the landlord was looking for, they have achieved a good deal. Generally, most quoting prices are in excess of what will be acceptable to the landlord but knowing how much they will reduce the cost to is the difficult bit.
Dan Smith of M4 Property Consultants explains “We are aware of a local business who recently signed a five year lease on an office building at 45,000 per annum. They thought as the landlord was quoting £55,000 per annum they had negotiated a good deal. However, a similar building, the same size and just down the road recently let at £38,000 per annum. Perhaps with professional advice and this evidence to hand, the tenant could have saved a further £8,000 per annum or £40,000 over the length of the lease. They may also have been able to have secured a schedule of condition to limit the tenant’s repairing liability and potentially a rent free period.”
Dan continues “We are aware of similar instances in relation to lease renewals where tenants have decided to represent themselves rather than seek professional advice. Great news for landlords but not such good news for tenants who end up paying in excess of the market level at renewal. Lease renewals are further complicated by more complex legal issues and timings. Simply not responding to a lease renewal notice within the prescribed timescale can have disastrous consequences with a proposed rent increase automatically taking effect. Commercial property is not a simple as some people may believe. It’s only simple when you know how!
It is important for businesses to realise that professional property advice doesn’t cost the earth. However, it could save them thousands. Whether it s acquiring or disposing of property, lease renewals or any other commercial property issue, businesses should take the relevant advice before considering dealing with it themselves. They may just find that a good commercial property advisor will become just as important to them as their solicitors and accountants!
Further information on how we can assist businesses with their commercial property can be found at https://m4commercialproperty.co.uk/tenant-and-occupier-services/
