Tips For Letting Out Your Commercial Property

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Utmost care has to be taken in letting out property since it not only involves monetary benefit but may also have legal implications. Here is a guide to letting out your property. While some of the tips relate to maximizing rents, other pertain to safeguarding your right as a landlord:

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Third Party Consent For Leasing

Sometimes a third-party consent may be necessary for leasing your property. This consent may especially be required from the lender (a bank or NBFC) in case your property to be let out has been arranged through loan. There might be a special permission to be procured by the municipality or the local authority for certain commercial uses of the property.

Associated Expenses

There are usually a lot of expenses that incurred in a commercial premises. These include property tax, upkeep of the building, expenses in cleaning and upkeep of common areas, maintenance of the parking space etc. Be very clear who will bear these expenses. If these expenses are to be paid by the tenant partly or wholly, you must get it in writing in the lease agreement.

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Tenant’s Business Activity

As a landlord, you have to be very clear as what business activity will be carried out by the tenant from your premises or the building. The tenant must carry out only those businesses that are allowed by the laws and by-laws of the zone and area where your property is located. If the tenant is carrying out an activity, lets says industrial activity, in your area where industrial business is outside the ambit of law for that locality then you may also be penalized along with the tenant. Understanding the requirement of the tenant is a must. The same has to be checked through the website of the municipality or any other governing body. A physical visit to the municipality or the governing body may also be required to get complete information.

Beautifying and Add-ons

A beautiful and well-maintained property can get much higher rent as compared to a property which is lacking in basic facilities. Beautifying will especially work when the economy or the local market for rents is not doing well. Get some of the add-ons like smooth and proper flooring in the showroom or the office space that you want to let out, proper security arrangements including a CCTV surveillance system, a fresh coat of paint etc. These will not cost too much but will help in fetching good rents. Getting a professional photographer to click some nice pictures of the property and using the same in listing classifieds will also help.

Get Legal Advice

Sometimes professional legal advice is required for letting out a commercial property. You may not be updated with all the new laws and regulations in your locality but a legal expert will be able to help in drafting the lease agreement in conformity with law. This may especially be required of the lease tenure is long because getting stuck with wrong terms and conditions for long will not be desirable.

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Lease Duration

If you have your own property and are letting it out for commercial purpose then try to get the length of lease duration as high as possible. This is so because the probability of your premises remaining vacant will be lower. If you are letting out your premises only one year at a time, then the chances of your property remaining vacant is higher in between one tenant and another. You can settle for a slightly lower rent also, if the tenant is opting for longer duration lease.  However, it must be borne in mind that the rentals can go up significantly with the commencement of some major infrastructure project in the vicinity. If that is a possibility, then opting for short duration lease would be more beneficial to cash in on higher rental yields later.

Eye on The Future Use Of The Property

Keep an eye on the anticipated use of your property in future and let out only those tenants that do not renovate in a way that will prove to be a hinderance in your future plans with the property. Also, if you plan to run your own business from your premises in future, you have to keep the lease tenure accordingly.

Termination of The Lease Tenure

Be very clear on the termination clause of the lease. If the tenant starts some activity from your premises at a later stage which is not conforming to the original stated business then the lease agreement would have to be terminated. Also, if the business activity of the tenant does not comply with the local laws then the lease agreement will have to be cancelled immediately otherwise the local authority may take legal action against you also.

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Source: https://ecis2016.org
Category: Lifestyle