Business change of Tenancy

What you need to know when moving premises

If your business is moving to a new rented commercial space, you’ll need to manage a change in business tenancy. This could be for a variety of reasons, for example: you may have outgrown your existing premises or you’re moving to a far more suitable location. Our in-depth guide hopes to give you all the essential details by outlining the practicalities you’ll need to consider before and after you make the big move. Switching your business energy is just one of the areas you need to plan for.

There are two options available when renting commercial premises, these will depend on the nature, size of your business and your affordability. Below you’ll find the main types of rental agreements available to businesses, as well as various considerations before agreeing to a new contract.

Leasing

Leasing is easily the most popular type of commercial rental agreement you will come across as a business owner/manager. Normally, you can expect a business lease to have a term length between 3 and 25 years.

Although, it is worth mentioning that lease term lengths are becoming smaller according to some reports. This is primarily due to the fact that commercial tenants are looking for options that provide extra flexibility when searching for a new rental agreement. Did you know that since 2015, 73% of all commercial leases signed were between one and five years?

It should already be clear that before you do agree to a new lease term, ensure this is something that is suitable for your business model.

Important considerations to make before signing a new lease contract

  • Break clauses: This gives the tenant or the landlord the option to end the contract early. Tenants often use break clauses to re-negotiate their lease terms.
  • Service charges: If the business premises let to a tenant forms part of a larger building, the landlord will often apply a service charge to maintain it.
  • Dilapidations: This is in regard to breaches in relation to the overall condition of the property at the end of a lease, and the fees the landlord may charge to rectify any damage.
  • Responsibility for maintenance: Ensure you are fully aware of any maintenance responsibilities attached to a specific premises before an agreement is made.
  • Rent payment schedule: Most commercial premises will mandate that rent should be paid quarterly in advance. However, if this isn’t suitable, you may have the option to negotiate with your landlord.

Licensing

A licensed property can often be easier, quicker and more cost effective to move into in comparison to a new leasing agreement. The wide availability of 12-month contracts provides start-ups with increased flexibility.

Important considerations to make before signing a new licensing contract

  • The landlord and tenant both have the right to end the contract at short notice. The tenant can take advantage of this flexibility, however it does mean that there will usually be some level of instability, as the landlord can also end the agreement with short notice.
  • Tenants do not have the automatic right to renew this type of contract once it has ended.
  • You should check to see if the landlord has the relevant permissions to grant a license for this type of tenancy.
  • Ensure the required facilities and services you need are included within the licensing agreement. Common examples may include car parking, air conditioning, and reception space etc.

Before you make the big move

Planning the move is normally more important than the actual move itself, especially when you factor in all the necessary work required to complete this task. We have outlined below what you’ll need to do before your existing rental agreement comes to an end and your new one starts.

Legal advice

To make sure all the right boxes are checked over with your previous landlord, and to start on the right footing with your new landlord. Obtaining professional legal advice is recommended. This may seem expensive, but it can save you a lot of time and money as the solicitor will make sure you are not in breach of any of your contractual obligations.

Notify your business energy supplier

Once your moving date has been confirmed, you will need to make contact with your current commercial energy provider for them to make the arrangements of transferring or cancelling your existing energy tariff.

It’s highly recommended that you notify your business energy supplier a month in advance of your moving date, this will make the transition process a lot easier for all involved parties.

To make sure your energy contract(s) are transferred correctly, and you’re only billed for the energy you make use of up until your moving date, you’ll need to provide the following information to your energy supplier:

  • Your moving date
  • Your final meter reading (this should be taken on the day of your move, not during the initial notice period)
  • Your forwarding address, for your final energy bill and to receive a quote for business gas and business electricity
  • The contact details of the business moving into the premises after you, or the contact details of the landlord

Repairs and maintenance

To avoid having to pay any dilapidations charges, you should carry out any maintenance or repair work to restore the property to its original condition when you first moved in. If you have made any modifications to the property outside of the contractual terms, these will also need to be reversed.

The landlord may charge you if you fail to carry out adequate maintenance and repair work.

If you do believe that you are being charged unfairly, you do have the option to dispute this through court proceedings. As mentioned previously, a professional legal advisor can help on this occasion.

After you have made the big move

Congratulations! You now have the keys to your new premises. Before celebrating, there are a few things you need to act on for the best possible start. We have highlighted these below.

Carry out fire and risk assessments

It is your responsibility to conduct a comprehensive fire and risk assessment of the premises.

Contact your current energy provider

If the previous tenant has followed the right procedure, you should be contacted by the property’s existing commercial energy supplier. They will detail what steps you need to take to start paying for gas and electricity use. If there are no prior arrangements in place, you will be placed on a deemed contract after giving the supplier an up to date meter reading.

If you’re unhappy with the expensive deemed contract rate, it’s quick and easy to compare business energy tariffs through our free online comparison tool. It shouldn’t take more than 10 minutes and there is no obligation on your part.

Frequently asked questions

How is my energy supplied when I move to a new premises?

When you enter your new business premises for the first time, the previous tenant’s energy supplier is providing the power. The previous tenant should have notified their commercial gas and electricity supplier that they are moving out. The previous supplier will still manage the supply and will charge you an expensive out of contract rate as you are not in a new contract.

What are out of contract energy prices?

An out of contract energy price is simply what the name suggests, the price you pay for gas and electricity when you have not entered into a new contract. These are usually the provider’s most expensive rates. This is a great opportunity to compare the lowest energy prices available, better yet, you don’t have to use the previous tenant’s supplier either.

Do I always pay more for energy when there is a change of tenancy?

A change of tenancy doesn’t necessarily mean that you should expect to pay the premium rate for gas and electricity. Utility Saving Expert can help you find and set up your new energy contract before you move in.