[vc_row type=”in_container” full_screen_row_position=”middle” scene_position=”center” text_color=”dark” text_align=”left” overlay_strength=”0.3″ shape_divider_position=”bottom”][vc_column column_padding=”no-extra-padding” column_padding_position=”all” background_color_opacity=”1″ background_hover_color_opacity=”1″ column_shadow=”none” column_border_radius=”none” width=”1/1″ tablet_text_alignment=”default” phone_text_alignment=”default” column_border_width=”none” column_border_style=”solid”][vc_column_text]Savvy investors are increasingly looking at the commercial property market – it could be the new lucrative option for those keen to but part of the sector. While buy-to-let has been the traditional option for property investors, more are turning to commercial rental opportunities, drawn in by the larger profits it can generate.

Of course, while the commercial property rental sector does present you with an opportunity to maximise yields, there are pitfalls too. You’ll typically find it harder to secure a mortgage if you can’t purchase outright, interest rates are generally higher, and there’s a whole host of legal issues and contracts to consider too. If you’re thinking about exploring renting out a commercial property, here are five things to consider first.

1. The location is key

Like any type of rental property, location is vitally important when you want to cut the risk of the property being unoccupied. Commuter links are essential for all types, while some businesses and property types demand a high consumer footfall to perform well. You’ll also need to consider your local area, identifying gaps in the market and where the up and coming locations are likely to be.

2. The term length

Commercial properties will usually carry term lengths that are much longer, Obviously, the longer the lease option the better from the perspective of the landlord but setting a lease length that is long, such as 15 years, could exclude some of the market, for example start-ups that want flexibility. Your contract needs to have outline the term length clearly and you might want to consider a break clause, so you can terminate early.

3. Repairs and alterations

Your contract between you and the business also needs to outline who is responsible for repairs and what alterations they’ll be able to carry out. It’s important to think about this before you go forward with a property, as you may find that costs can be significantly higher than anticipated if it’s not an area you’ve weighed up.

4. Insurance

You will require a different level insurance when compared to the buy-to-let market and costs can vary hugely depending on the type of building that you purchase. In some cases, landlords leave the insurance responsibility to the tenants, but others choose to cover it themselves for complete peace of mind.

5. Lease transfers

Once you’ve let a building to a tenant, they might not always want to continue using it for the full term and they may want to sublet it to another business. But what if the subletters aren’t suitable. Considering this beforehand means you’re able to include restrictions in the lease, providing you with further protection.

Ready to unlock the potential of the commercial rental sector? Speak to our expert legal advisors today to understand your position.[/vc_column_text][/vc_column][/vc_row]

Related News