Business rates are a significant expense for many commercial property tenants. One strategy some businesses consider to mitigate this cost is subletting part or all of their premises. This guide will explore the legal and practical considerations of subletting to avoid business rates, potential risks, and how Fraser Bond can assist you in making informed decisions about your commercial property.
Business rates are taxes levied on non-domestic properties, such as shops, offices, warehouses, and factories. They are calculated based on the property's rateable value, which is determined by the Valuation Office Agency (VOA).
The occupier of the commercial property is responsible for paying business rates. This is typically the business that operates from the premises, whether they own or lease the property.
Subletting involves leasing part or all of your rented property to another business. The subtenant pays rent to you, the primary tenant, which can help offset your business rates and other expenses.
Before subletting, it is essential to understand the legal implications and ensure compliance with all relevant regulations.
Check your lease agreement to see if subletting is permitted. Some leases prohibit subletting entirely, while others require the landlord's consent.
If your lease allows subletting with the landlord's consent, you must formally request this consent. The landlord may impose certain conditions or require you to follow a specific process.
The rateable occupier of the property is liable for paying business rates. If you sublet part of your premises, the VOA may reassess the rateable value and potentially split the liability between you and the subtenant.
Notify the VOA of any subletting arrangements. They will need to update their records and may re-evaluate the rateable value of the property.
Create a comprehensive sublease agreement outlining the terms and conditions of the subletting arrangement. This agreement should include details such as rent, duration, responsibilities for maintenance, and payment of business rates.
Seek legal advice to ensure the sublease agreement complies with all legal requirements and protects your interests.
Find a suitable subtenant whose business operations are compatible with your own. This can help avoid conflicts and ensure a harmonious working environment.
Clearly define the areas of the property that will be sublet. Ensure both parties have access to necessary facilities and that shared spaces are managed effectively.
Fraser Bond offers expert consultation to help you understand the legal and practical aspects of subletting. Our team can guide you through the process and ensure compliance with all relevant regulations.
We can review your lease agreement to determine if subletting is permitted and assist in obtaining the necessary consent from your landlord.
Our legal team can draft a comprehensive sublease agreement that protects your interests and ensures a smooth subletting arrangement.
Fraser Bond can help you find suitable subtenants through our extensive network and marketing strategies, ensuring you find reliable and compatible tenants.
We provide advice and support in managing business rates, including liaising with the VOA and ensuring accurate assessments.
Fraser Bond offers ongoing support to address any issues that may arise during the subletting arrangement, ensuring a successful and profitable tenancy.
Contact Fraser Bond to learn more about how we can assist you with subletting and managing your commercial property.
Subletting can be an effective strategy to reduce business rates and generate additional income. However, it requires careful planning, legal compliance, and effective management. Fraser Bond is committed to providing the expertise and support you need to navigate the subletting process successfully. Contact us today to discuss your needs and find out how we can assist you.
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