Leasehold Interest

deadwood85

Is a leasehold interest good for a start up food business any info on the pros and cons would be helpful ?
What is the upfront money for is it just to cover equipment etc?

Is the rent negotiable ?

Thanks any info at all is appreciated.

Gloomtastic!

deadwood85 wrote: »

Is a leasehold interest good for a start up food business any info on the pros and cons would be helpful ?
What is the upfront money for is it just to cover equipment etc?

Is the rent negotiable ?

Thanks any info at all is appreciated.

Helping out someone at the moment in the same line so learning lots. Here's what I know so far....

Leasehold interest is basically sub-letting a property. The original tenent may be going out of business or no longer in situ, for whatever reason, and maybe paying rent on an empty property. You'll need to speak to a solicitor to go through the lease to see how it may affect you. One thing to make sure is, has the leaseholder been paying their rates? If not, you may be held liable for any outstanding amounts in the past (although they are changing this law currently, it may not affect sub-letting).

You'll need to check the length of lease left. You may have to hand the premises back, in the state that the original tennent found it, even though your business is running successfully. The leaseholder is under no obligation to continue renting to you.

Upfront money seems to be making a comeback having gone away for a few years, especially for properties in busy locations with planning for restaurants. It may cover equipment or it may be just to get hold of the keys!

Rent can be negotiable but it depends on what other property is available in the location. There might be lots of empty shops in the area but to get a change of use to a restaurant is not guaranteed and at the whim of the planners.

There seems to be a real shortage of suitable properties in key locations, like Central Dublin, and agents are reporting that people are starting to spend silly money just to get the keys, leaving little left for fitting out the premises.

Be careful and always employ a solicitor to check through any lease before you sign anything.

DubTony

Gloomtastic, your info is ...well ... not quite right.

There are three types of interest a person may have in a property. Freehold, leasehold and tenancy.

Freehold means he owns the property and the rights that go with that.
Tenancy means he pays an agreed fee to the owner or leaseholder, but has few rights.
Leasehold means that he has a legally binding agreement with the property owner whereby the property owner effectively rents the property rights he has to the leaseholder for a set term. This locks the leaseholder in to paying rent and usually maintaining the building for a period of time outlined in the lease.

A leaseholder is usually only allowed to sub-let with the agreement of the property owner, but he passes few rights onto a sub-letting tenant.
A tenant can be told to go at short notice. A leaseholder can only be forcibly removed from the property by way of a court order.

OP, just be aware that a leasehold agreement ties you into paying rent and maintaining the property for the period of time outlined in the lease. However, the upside is that the lease is an asset that can be sold at any time, usually subject to approval of the purchaser by the landlord.

Gloomtastic!

DubTony wrote: »

Gloomtastic, your info is ...well ... not quite right.

There are three types of interest a person may have in a property. Freehold, leasehold and tenancy.

Freehold means he owns the property and the rights that go with that.
Tenancy means he pays an agreed fee to the owner or leaseholder, but has few rights.
Leasehold means that he has a legally binding agreement with the property owner whereby the property owner effectively rents the property rights he has to the leaseholder for a set term. This locks the leaseholder in to paying rent and usually maintaining the building for a period of time outlined in the lease.

A leaseholder is usually only allowed to sub-let with the agreement of the property owner, but he passes few rights onto a sub-letting tenant.
A tenant can be told to go at short notice. A leaseholder can only be forcibly removed from the property by way of a court order.

OP, just be aware that a leasehold agreement ties you into paying rent and maintaining the property for the period of time outlined in the lease. However, the upside is that the lease is an asset that can be sold at any time, usually subject to approval of the purchaser by the landlord.

Thanks DubTony. The info mostly came from Estate Agents so it may be a bit vague! (Have to say though, Commercial Agents are a lot more professional than their Residential bretheren).

Taken on board the lesser rights issue. Will check it out with the solicitor before anything happens. One of the properties is currently owned by NAMA so goodness knows who it will end up with!

deadwood85

Thanks for both replies,the guy subletting wants 40 k key money and only offers 4yrs 9mths he said its the only lease the landlord is offering now i won't pay that much key money its too high and would rather a longer lease but the location is great and could be worth it ,

Gloomtastic!

deadwood85 wrote: »

Thanks for both replies,the guy subletting wants 40 k key money and only offers 4yrs 9mths he said its the only lease the landlord is offering now i won't pay that much key money its too high and would rather a longer lease but the location is great and could be worth it ,

Think we've looked at that place as well