You'll need to review your current lease to check when its
current terms ends and whether you're required to give your
current landlord notice that you're moving on.
It is also important to check what your lease states about the
condition you're required to leave your current premises
If you have altered your premises during your lease you may be
required to reinstate the premises back to its original layout, and
this can include removing your signage. You may also have to
replace floor coverings and repaint the internal walls if those
items have been damaged beyond what would be considered to be
"fair wear and tear". These works can quickly
add up so you'll need to factor them into your budget.
We then strongly recommend that you prepare a premises
condition report either before or immediately after you move
into your new premises. This report should record a snapshot of the
premises when the lease commences (including photos). This will
hopefully prevent any arguments around how the premises needs to be
left when the lease ends.
Fitout of the new premises:
Will you be able to fit out your new premises to suit your staff
and business? Will you be able to put up signage?
Another key question will be whether you'll be able to fit
out your new HQ after you've moved in, or whether you'll
need to keep your current lease on foot (and perhaps pay for two
rentals) until the new premises is ready. You may wish to enquire
whether your new landlord is prepared to grant you an initial
rent-free period while you get up to speed.
You'll also need to check whether you will be required to
obtain the Council's consent for any fit out as well as making
an allowance for the time and cost of doing so.
It is likely that you'll be required to provide a personal
guarantee to back up your company's lease. If possible you
should try to limit your guarantee to a set amount (e.g. 6-12
month's rental), and have it recorded that your guarantee will
cease if the lease is assigned.
Term and renewals:
Shifting to a new premise is a big commitment so you'll want
to negotiate a long enough lease term and rights of renewal which
reflect that. Alternatively it would be prudent to ensure
you're able to assign the lease or sublet space if the new
location ends up being less than ideal.
You'll obviously need to figure out whether the initial
rental is affordable, but you should also forecast future rent
reviews. For example, a landlord may offer you a reduced rental to
begin with, but that the rent may jump considerably when it is next
We recommend that you obtain an estimate of the likely outgoings
before you sign up to a new lease. For example, you may be required
to pay the landlord's insurance premium which could be
expensive depending on the building's condition. Alternatively
if you are shifting into a retail centre you might be required to
contribute towards the cost of jointly marketing the centre.
Leases often limit the type of business activities the landlord
will permit in the premises. As a tenant it may be preferable to
list the permitted use as something general like
"retail" or "any use permitted under
the relevant district plan". This will allow your
business to grow and evolve over time. For example if your lease
states that you are only allowed to sell footwear, then this
wouldn't allow your business to expand to sell other
fashionwear. It may also limit the number of potential businesses
you can assign the lease to if you need to move on before the lease
It might seem obvious, but if you've been residing in a
suburban premise your staff and customers may have been spoilt for
choice when it came to finding a car parking. When choosing your
new premises you may wish to consider whether it is important that
your premises has dedicated car parking, or is otherwise close to
public transport routes.
Tenancy mix and competition:
What other businesses are nearby? Will they complement or
compete with your business? You may wish to include an
exclusivity of trade clause which gives you the sole right
to conduct a type of business within the cluster of shops owned by
Seek advice early:
Our 10th tip is that you seek advice as early as possible. Once
an agreement to lease is signed it is too late.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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