How to save money on business premises
Premises are one of a business’ biggest overheads and it makes sense during the current downturn to see what steps you can take to reduce your premises costs. Steve Petty, commercial property solicitor with Cousins Business Law provides his top ten tips for reducing premises costs. Taken together you could reduce cash flow pressures as well as create a firm footing for securing property bargains in the future.
- If you are about to move premises, particularly in the office sector, take a short term lease rather than buying. Prices in commercial property will continue to fall throughout the year and you should be able to pick up some real bargains at the start of 2010.
- Negotiate hard for concessions for any new lease. Rent free periods of six months or longer are common and are a real boost to cash flow in the short term.
- Renegotiate existing leases. Ask your landlord if you can pay rent monthly rather than quarterly. This approach is being adopted by major high street chains with some success.
- Transfer existing premises into your pension fund. If you’ve built up a cash rich fund then it may be worth selling any premises you own to the fund and leasing them back to the business. This will release valuable cash for the business to use. Obviously you should take advice on the taxation and other consequences of this step from a financial advisor specialising in pension matters.
- Negotiate open market option agreements. Whether you are looking to secure business premises or buy a development site, the best policy in a falling market is to negotiate the right to buy the premises at some point in the future at whatever is the open market price at the time. This secures the property for you but saves you having to guess now how much further the market will fall.
- Use lease renewals to take advantage of falling rents. Rent reviews are still almost always ‘upwards only’ but when a lease is renewed it’s your best opportunity to negotiate a lower rent. Make sure you take control of the renewal process to achieve this.
- Adopt strategies to avoid business rates on empty property.
- Take advantage of tax breaks such as Business Property Renovation Allowance.
- Minimise your initial SDLT liability on new leases by agreeing a shorter term with an option to renew.
- Explore renting out surplus space in your premises. Websites such as www.wantdontwantspace.com offer a marketplace for surplus space.
Cousins Business Law can offer advice on all of the above money saving tips. Contact Steve Petty for further advice.
Article added: 24 February 2009 © Cousins Business Law
This article is not intended to constitute legal advice, nor is it intended to be a complete and authoritative statement of the law, and what we say might be out of date by the time you read it. You should always seek legal advice to confirm whether or how any information in this article applies to your particular situation. We offer a free 30-minute telephone advice session to discuss your particular circumstances.
For more articles and advice subscribe to the Cousins Business Law ezine here
|