anyspacedirect news

The benefits of a short and long-term commercial lease

5th May 2011
In modern day business, short term commercial property leases are increasingly common. Gone are the days of 25-year leases, but there are still pros and cons for securing both a short and long term commercial lease for your business.

These days a short term lease is regarded as less than 10 years. So for any evolving businesses it is important to understand the benefits of a short and long-term commercial lease in order to cater to the circumstances of your organisation’s needs.

Short term leases

Perhaps the most important benefit of a short term commercial lease is that a business is not tied down to a lease that restricts their growth over a period of time. Many small and medium sized businesses looking to evolve during their infancy may soon require bigger office space to let and when you are stuck with a fixed long-term lease it is a struggle to get out of without paying a significant penalty fee.

A short term lease also enables businesses to pay a smaller amount of stamp duty which is calculated as a percentage of the total rent payable over the lease period.

Long term leases

The main advantage of a long term commercial lease is that it gives your company stability, safe in the knowledge that you will remain at your new premises for the foreseeable future, creating a strong business presence. Some longer leases now include break options where businesses can pay a ‘get out’ clause fee. However, if you are likely to require a ‘get out’ clause it may be sensible to arrange a short term lease and avoid having to pay unnecessary fees to change premises.

A long term commercial lease without any ‘get out’ clauses would be beneficial to any business that invests heavily in developing a building or unit with heavy duty or expensive machinery installed that is difficult to move. Furthermore, the costs of refitting your equipment into new premises are avoidable with a long term lease.

Overall, a long-established business remains better suited to long term commercial leases, while SMEs and business start-ups should definitely consider the flexibility of a short term lease to help them take their first steps without too greater financial risk.
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