Has your one person startup blossomed into a 20 person business? Or are you considering moving your team to somewhere bigger and better? Here are some of the pitfalls to look out for when taking out a lease on an office space. If you’d like to switch to a serviced office or coworking space, take a look at our listings page.
1. The costs do add up
Leasing an office is similar to buying a house in the sense that the mortgage is just the start of it – other expenditures can be a colossal drain on the old bank balance. Service changes like cleaning services and meeting rooms are paid for by the occupier. IT installation is very expensive and it can take up to three months to get a line. To ensure you remain within budget, you must also factor in the following:
- Business rates – tax on business properties set by the government.
- Stamp duty and land tax – a 1% tax due on rents over £125,000.
- Repairing obligation – if you break it, you gotta fix it.
2. You’ll have to furnish it yourself
And thus incur another extra cost. If you want to impress clients and maintain your team’s productivity and wellness levels, you’ll have to invest in decent furniture and fixtures. Serviced offices, on the other hand, are fully furnished and maintained by the providers and because the market is becoming so competitive, they look great too.
3. Leases are subject to regulation changes
More commitment means more risk, which is why businesses leasing an office were rightly worried when the government announced a shake up in the amount companies will have to pay for their business rates earlier this year. Read about how a recent financial regulation could spell the end of the long-term office lease.
4. It can be a lengthy process
Current tenants and general bureaucracy means it can take a long time to find a leasehold and move in – with serviced offices and coworking spaces you can move in pretty much instantly, depending on availability.
5. It’s a commitment
What happens when your business outgrows the space? If you do go down the leased route, make sure you negotiate a good break clause allowing you to end the contract early should your business fail or your need to relocate. Your workspace should be a place in which to grow and prosper, not a financial burden that isn’t fit for business. Unlike leaseholds, serviced office contracts are very flexible, allowing you to to obtain more (or less) space as and when you need.
For further info on leasing an office, download the Code for Leasing Business Premises.