According to the Office for National Statistics, in March 2011 there were over 2 million enterprises in the UK registered for VAT/PAYE, which is a decrease of 2.4% compared to the figures for the same period in 2009. However, with the country now said to be in recovery, many businesses will be looking to expand premises and as a property owner you could benefit from this by renting your commercial property or serviced offices out.
Becoming a landlord can be a risky business, but amongst all the risks there are also huge benefits as long as you are sufficiently covered. So – let us look at the downsides;
If you own commercial property, you will have noticed that lease lengths are getting shorter. Tenants are unwilling to sign new leases for terms longer than 5 years as they don’t know if their businesses will continue to exist that long.
This is awful for landlords who face having a vacant shop or office or industrial unit in 5 years time when they will have to start all over again in finding a new tenant. As well as this, short leases decrease the value of commercial property and give the banks even more reason not to lend.
Also – with more and more small businesses going to the wall as banks continue their onerous and restrictive practices you stand the real risk of losing a tenant overnight and will then be left trying to cover the mortgage while you find a new tenant (or worse , the tenant goes out of business still owing you rent so you receive a double whammy).
You must bear in mind that if the building gets damaged, by fire, water etc, and the tenant cannot use it and has to move out, even on a temporary basis, then once again you will lose income – so make sure that you are adequately insured against this possibility.
All in all – risks and rewards o it’s up to the individual to weigh the pros and cons before they act.
Previous Post
Commercial Property Market in Stockport
