How to reduce vacant tenancy periods in commercial property
There are many reasons that you might wish to avoid vacant tenancy periods in your commercial property – loss of rental income is probably at the top of that list. But there can be more to worry about than simply losing money. We look at some of the risks and how you can avoid them.
The problems of vacant premises
Aside from the money that an empty property isn’t earning, there are also the risks of vandalism to the premises and squatters moving in. Finding an insurance policy when a property is vacant can also be problematic. Empty properties also contribute to the perceived deterioration of an area, particularly in a high-street setting, which may lead to a more permanent situation in which the property is either let at a reduced rent or is vacant permanently.
Commercial landlords with empty properties also face a double hit financially – not only is there no rent coming in but they are also liable to pay the full amount of business rates on properties which have been empty for over three months (non-industrial premises) or six months for industrial premises.
What can a landlord do?
- If you’re having difficulty letting your commercial property, there are some tactics you can adopt;
- You can consider offering prospective tenants a more flexible lease or reduce the rent to entice them to begin their tenancy
- If your premises is large enough, you could think about splitting it into smaller units
- Ask your local council about the possibility of applying for a change of use for the premises which may attract more potential tenants
- Ensure that the rent you’re proposing to charge is competitive
- Present the property to its best advantage – clean, dry, secure premises will be more of a draw to tenants than those which require high levels of investment at the outset of a lease
- For residential properties you could consider short-term rentals or even becoming an Airbnb host
- Rent your commercial property to a charity – not only will they gain a premises but they will also benefit from 80% business rates relief
- If your premises are suitable, rent them to a Community Amateur Sports Club. They will also gain from 80% business rates relief
- Occupy the premises yourself – use it to conduct business or simply for storage for at least six weeks and you’ll be able to claim a business rate rebate from the council
Of course the real secret to avoiding periods of vacant tenancy is to plan astutely in the run up to the end of a current tenant’s lease to avoid a lengthy and costly period of vacancy.
If you need assistance in finding suitable tenants, or want more advice about how to market your commercial property, speak to a member of our team.
Written by: Steven Jones on Monday 08/05/2017