If you are a first-time commercial landlord then read on for some tips and advice about commercial letting in Ireland. There is quite a bit to cover so we’ll jump straight into some main points.
Tenant Screening
A common mistake among Commercial and Residential first-time landlords alike is being too eager to get the property filled and making money. However, this may not always be the most profitable route as a troublesome tenant can cost more in the long run. You should ensure that your tenants can meet their financial obligations and are prepared to meet minimum upkeep standards as set out in your lease.
Deposits & Guarantees
There are ways to mitigate your risk as a first time commercial landlord. You could consider requiring a Guarantor to the lease or request a larger deposit than the usual 1-2 months rent. It can be tricky though, as the last thing you want to do is scare off a potentially perfect tenant with too many conditions.
Rent
Before settling on a figure for your commercial property, you should seek professional advice on the matter, as pricing your property appropriately will help attract the right tenants. When establishing your rental price, also think about rent reviews and how often you should have them. With the current market in Ireland skyrocketing, this aspect of your lease agreement should not be neglected.
Term & Break clauses
Obviously the longer the term of the lease agreement, the more security for the landlord. However, in today’s market landlord’s are finding it harder and harder to get companies to commit to a longer lease. Most companies want a shorter lease with an option to extend if conditions are favourable. Another option for the tenant is a Break clause, which enables the tenant to end the agreement early if their circumstances change. This is not ideal for any landlord and more often than not, if a break clause is included, it is used and should be factored into any costs from the start.
Repairs & Maintenance
A lot of this comes down to the state of the property itself. If you are letting a new commercial property then repair and maintenance – once you stay on top of them – should never be a big problem. Therefore once you have a minimum repairs agreement with your tenants and you fulfil your duties as a landlord then there should be no problems. However, if your property is an older one and your tenants are only on a relatively short lease, it is unrealistic to expect the client to have to carry out major repairs. This is particularly common in multi-unit lets.
Intended Use
Another important factor to consider is what the tenants intend on using the property for. It should also be clear that the agreed-upon purpose cannot be unilaterally changed as this can affect the future state of the premises and potentially cause issues for neighbouring tenants. For example, you agree initially that your client is using the property for a car storage facility. You come back 6 months later and it’s a children’s play centre. Big problem. A good tenant will never do this but it should be made clear in the agreement what the purpose is.
Alterations
Commonly clients will want to carry out some work on the property to better reflect their company’s needs. Signage and branding are also included in this. It is up to the landlord, regardless of who carries out the works, to make sure it is completed to a high standard and meets health & safety regulations. One thing a first-time landlord should be aware of is making sure any alterations to the property can be easily undone at the end of the term so the building can be put back on the market.
As usual if you are a landlord in Ireland looking for advice or help in managing your property portfolio, then please don’t hesitate to give us a call any time. KPM Group have over 25 years experience in property management in Ireland and would be happy to help in any way we can.
