| Your premises
will be your second largest overhead after staff costs, so
it’s vital to get not only the right property, but the
right contract terms too.
As the Royal Institution of Chartered Surveyors puts it:
‘Property can boost profit margins for your business
or be the agent of your demise.’
This guide runs through the various legal aspects you will
need to consider when sourcing and taking on new premises,
and explains the roles of the various professionals involved.
No sooner have you started thinking about new premises than
you need to begin gathering your professional allies around
you. A range of expert advice is essential when leasing or
buying premises. While a solicitor can advise you on the legal
aspects of contracts, a chartered surveyor is the person to
ask about the property itself and going rates. He or she can
also negotiate the property deal on your behalf.
Legal pitfalls to avoid
Without proper legal and technical expertise, you could find
yourself facing a legal minefield. Below are just a few of
the pitfalls to avoid.
Leases
Accept restrictive or onerous terms and you could find your
premises acting like a noose around your business’s
neck, holding you back or stopping you from leaving just at
the time you need to expand and move on.
Talk to a solicitor or surveyor early on. Their expert knowledge
will allow them to spot any restrictive terms and suggest
suitable ‘break’ clauses or the right to sublet.
Survey
Failing to spot serious structural problems may not only
cost you significantly in terms of repairs, but could shut
down your business if it is deemed too dangerous a place under
health and safety legislation. You also need to ensure you
are not breaking planning regulations because the particular
premises you have chosen cannot be used for your type of business.
Get the basics right in the first place by using a reputable
agent to find you properties and ask the advice of a chartered
surveyor on the structural state of the building, particularly
if you are purchasing the premises or leasing on a ‘Fully
Repairing and Insuring’ lease.
Also seek advice concerning disabled access, as to incorporate
the requirements of the Disability Discrimination Act may
be expensive.
Service charges
Escalating service charges to cover things like maintenance,
insurance, cleaning and security could put you in a vulnerable
position. Ask existing tenants about the level of service
charges and whether the landlord provides efficient services.
Ask the advice of your solicitor or surveyor about the possibilities
of negotiating a cap on your service charge liability. Also
check to see if any significant items of expenditure (eg roof
replacement) are likely in the near future.
Health and Safety
Fail to meet the health and safety practices laid down for
your industry and you could find yourself being shut down,
or facing hefty fines. Similarly, the local fire safety officer
could refuse to allow you to open if your fire safety precautions
or the building itself are a fire hazard. Keep up to date
with health and safety legislation and take advice from your
solicitor, fire officer or other professional on your responsibilities.
Employers are obliged to ensure the workplace is safe and
without risks to the health of employees. Crucially, employees
must be given health and safety training and be kept informed
of any risks to their health and safety. If you have employees
in an office or shop, you need to register with your local
council (normally the Environmental Health department). If
you have a factory, you must register with the Health and
Safety Executive.
As an employer, you must assess the risks to health and safety,
and draw up a health and safety policy statement. In addition,
someone must be appointed to assist with health and safety
responsibilities, there should be first aid facilities, and
emergency procedures should be set up in case of fire. The
workplace must also satisfy certain other health, safety and
welfare requirements (eg adequate ventilation, temperature
and lighting).
Who you will need to help you
Commercial agent
Unless you are very lucky and have found premises through
contacts, you will probably need the services of a commercial
estate agent to search the market for you and tell you about
any new developments being built. Just like house-hunting,
it’s worth signing up with several agents in the area
to help you find your ideal premises. They will negotiate
the deal for you, which may include rent-free periods to allow
for fitting-out works.
Solicitor
A solicitor is vital. He or she will be able to advise you
on the implications of all the terms of a lease, find out
if the property has planning permission, advise you on the
timing and method of rent increases, negotiate more favourable
terms and raise appropriate enquiries with the landlord.
If you are planning to purchase premises, your solicitor
will carry out the various searches and other legal checks
(such as whether there are any restrictions on the use of
the premises or local plans in the pipeline (e.g. one-way
streets) which might affect your business) as well as advising
you on any mortgage which you may be committing to as part
of your purchase.
If you don’t already have a solicitor, you could contact
Lawyers For Your Business (LFYB), a Law Society initiative
to help small businesses. LFYB offers SMEs a free one-off
consultation to diagnose problems and any need for action.
Chartered surveyor
These professionals can be instrumental in your choice of
premises. They will know the market and be experienced in
negotiating the price and terms of a contract on your behalf,
whether you are buying or leasing your premises. They will
also be the people to turn to for advice on valuations and
structural matters. To find a chartered surveyor, contact
the Royal Institution of Chartered Surveyors. It may be the
case that they can also act as your commercial agent.
Insurance
Employers Liability Compulsory Insurance
Employers are required by law to insure at a minimum level
against liability for injury or disease to their employees
arising out of their employment. A current certificate of
insurance should be displayed at the place of work. (Some
small family businesses with close relations as employees
may be exempt from the requirement to have insurance).
Public Liability Insurance
Aside from employees, you also need to protect yourself against
members of the public making a claim against you if they were
injured on your premises or as a result of an employee’s
activity. Although public liability insurance is generally
not compulsory (although it might be required by your landlord
under your lease), it is advisable to take it out.
Insurance for the premises and equipment
Whatever type of business you are in, you will also need
to take out insurance to cover your equipment (and premises,
if this is your responsibility).
Fire safety legislation
You have legal obligations to take certain fire precautions
too. Your premises will require a fire certificate if they
are used as a shop, office or factory where more than 20 people
are employed (ten people if you are situated other than on
the ground floor). Your local fire safety officer is the person
who grants the certificate and can advise you on your obligations.
Even if you only employ one person, you will need to ensure
you comply with certain fire-safety precautions (e.g. fire
detection alarms, lighting and extinguishers).
Further information
Helpful organisations
Your local Business Link, Chamber of Commerce, or the Economic
Development department of the local authority may be able
to offer advice on matters such as financial grants, employment
legislation and local intelligence (e.g. business rates, flood
areas).
Likewise, a trade or professional organisation may be able
to offer expertise on choosing the right premises for your
particular industry or trade.
Royal Institution of Chartered Surveyors (RICS)
T: 0870 333 1600
email: contactrics@rics.org.uk
W: www.rics.org
Lawyers for Your Business
Run by the Law Society this scheme has 1700 participating
members in England and Wales who will give a free half-hour
consultation on the legal issues and pitfalls to avoid when
starting up a business or growing one.
Lawyers for your Business,
The Law Society,
Freepost WC 2576,
London WC2A 1BR
T: 020 7405 9075.
W: www.lfyb.lawsociety.org.uk
Health and Safety Executive
HSE Information Services,
Caerphilly Business Park,
Caerphilly,
CF83 3GG
T: 0845 345 0055 (HSE infoline)
W: www.hse.gov.uk
The Nationwide Access Register
W: www.directenquiries.com
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