What to do before you let a business use your commercial property

If you already own premises or are just starting the process of purchasing a property, you might be considering renting them out for business use. This can be an effective way to generate regular income and ensure the space is used to its maximum capacity. However, before you plough ahead and agree to let a company move into your building, there are certain things you must do to not only safeguard the new tenant and their staff, but also yourself. 

We’ve put together this list of areas you need to look at before you start renting out your property for commercial use. Read on to find out what they are…

Make sure your deeds allow it 

The deeds to your building may well have restrictions on what can be done on the grounds of the property so you need to check what they say. Check not only that different types of industry can operate there but also that non-owners (i.e. your renters) can be the ones to perform the tasks in question.

Conduct a full inspection of the premises

You need to ascertain what state the building is in before you can even consider renting it out. This would include areas such as the structural integrity of the building, the water pipes to deem water safe to drink or wash up in and would also include having an electrical installation condition report generated. Regardless of how long you have owned the building, when it was last rented or even if it has sat vacant for some time, everything needs to be checked in full primarily for safety reasons. 

Conduct any upgrades and reparation works

The inspection should yield results and advice regarding any problem areas, what needs fixing, changing, installing or upgrading. If this advice is strongly recommended then it would be worthwhile to complete all the tasks prior to any tenant moving in in order that you can rest assured your property if safe for people to work there. A Strata Report is a document that includes all financial and management information about a property under Strata Title.

Do some research into the company 

Having your property sitting vacant can seem like a huge expense so it might be tempting to agree to anyone moving in. However, make sure you do some research into the company beforehand. Will they be conducting a lot of noisy tasks or activity in anti-social hours? Might they have ethics you disagree with? Will their practices cause any damage which you will need to fix at a later date? Checking them out or performing some form of person tracing should eliminate some potential risks.

Negotiate rent

Usually the key reason you’d be renting a property out is to generate income so make sure both parties are happy with the rental amounts, the payments terms and method and when they will be reviewed. 

Create a lease agreement 

You need to protect both parties by having a legal agreement in place which is signed by both sides. This should include your rental terms, the notice periods, servicing requirements of the property (that both you or they might have to adhere to) and any restrictions on what they can or can’t do there. 

Get the right insurances

Sadly, things do sometimes go wrong so protect yourself with the right insurances. These could include: 

Building insurance – for any threats/damage to the premises 

Property owner’s public liability insurance – in case anything happens to members of the public whilst on the premises

Landlord’s liability insurance – in case anything happens to the staff, tenants or visitors whilst on the premises

Employers’ liability insurance – in case anything happens to the staff who work for you 

Unoccupied property insurance – for when the property is vacant 

Once you have followed all these requirements, you will be in a great position to rent out your property for commercial use. Just make sure you follow this before every new tenant moves in!