Office space in London can be a challenge
1Office UK director Ivar Veskioja explains to overseas entrerpreneurs the process of leasing an office space in London.
London is an attractive metropolis
The United Kingdom continues to be England together with Scotland, Wales and Northern Ireland and London is still an attractive destination for start-ups and tech companies. Renting your own office in London is more difficult in comparison to many countries, on the one hand the reason for that is the flurry of historic legislation and on the other the different unwritten rules.
There are few small office spaces in the centre
Finding a small office space in the class A commercial building is difficult in central London. As a rule new commercial buildings wish to rent out at least half a floor at a time. In case of older and less presentable buildings it is possible to find spaces of less than a hundred square metres but then the building’s general condition and communications will not be comparable to new commercial buildings. London’s chaotic centre is full of buildings of different eras with different levels of quality. A regular sight is a hundred and fifty year old three-floor building next to a skyscraper, which has been adjusted suitable for offices. For a requirement of an office space of less than fifty square metres one of the many serviced offices can also be considered. As a rule on closer inspection the price of the serviced office space will become more expensive by various additional charges. In case of serviced office offers the size of the annual price increase also has to be ascertained. It is a city of rising real estate prices.
Finding a suitable office space
There are no good portals for finding a suitable office space online. Lessors rely on estate agents and estate agents keep the information and traditions of the profession. On seeing an advert in a suitable place on the street you may try reach negotiations yourself. The lessor is represented by an estate agent and a solicitor, who traditionally prefer to negotiate with the counterparty’s estate agent and solicitor. Whether the estate agent of the lessor is being paid only by the lessor or also by the tenant has to be checked. When using an estate agent representing the tenant his aim is to achieve a favourable contract for the client and the tenant must pay the fee for it.
When negotiation the tenancy agreement it is important to adopt an approach suitable for the lessor and to create a trustworthy impression. Presenting a company registered in the United Kingdom as the future tenant and using an estate agent and solicitor are the simplest means for it. It is important to note that for small spaces it is possible to get three to twelve months rent relief in case of a five year contract and/or a discount for a certain period. Discounts always only apply to rent, not for service charges or business rates. In case of a period of less than five years discounts are not generally offered.
Rent, service charge and business rates
The price of rent in the city centre may range from twenty pounds to sixty pounds per year per square foot depending on the location, building and condition of the space. The prices of decent spaces start from thirty pounds, each ten pounds per year equals around 11 euros per month per square metre. As a rule rent and service charge have to be paid in advance per quarter. Service charge is in the range of seven to ten pounds per square foot per year. For the business rates the company has to register itself with the local council and its size depends on the estimated size of the annual rent of the space. Around ten pounds per year per square foot has to be considered.
Contract and deposit
In case the negotiations with the lessor were managed to be passed successfully without the help of a solicitor, then even with an excellent command of the English language you may get in trouble when reading the contract. A contract of over thirty pages long containing archaic legal terms may be safer to go through with the help of a solicitor. Requiring a six months’ deposit is normal and rental spaces need to be returned in the original condition. The contract may also provide for an obligation for the tenant to keep the rooms in good order up to painting the walls.
Good to know
City of London – City centre district
Square feet and square metres – In the United Kingdom the area unit is square foot, the equivalent of one square metre is 10,764 square feet.
Electricity plugs are different from the ones used in most of the Europe.
Check the location of electricity cables – A category A lease agreement only defines the existence of lighting and air conditioning. Cabling may be an additional investment.
Air conditioning – Check whether the air conditioner only works with indoor air or whether ventilating the rooms with outdoor air also takes place.
Help with terms
Heads of terms – The original offer with prices and conditions
Acquisition – Term for finding the space for a client by an estate agent
Chartered surveyor – A qualified estate agent in the United Kingdom
Solicitor – A lawyer in the United Kingdom (distinguished from a barrister)
Business rate – Local council tax, which is paid by all non-domestic properties
Service charge – Name of utility expense in the United Kingdom. A separate mandatory insurance payment may be added to utility expenses.
London & Partners is the official promotional company for London
Hanlon Bennett Consulting commercial property advisers
+44 20 3598 4892