From one-person companies to the largest corporations, every business needs space to flourish. Renting space in an office can have enormous benefits, often providing more flexible rental arrangements than taking on an entire property. You may also gain access to facilities such as meeting rooms and breakout spaces that would exceed the budget in a standalone office.
For many businesses, sub-letting some space capacity has the obvious advantage of bringing in regular additional income for otherwise empty space. There are also potential benefits in co-locating with complementary businesses that can generate partnerships and lead to new clients.
However, there are financial and legal obligations to consider - the lessor and the lessee need to protect themselves and ensure the arrangement is mutually beneficial. Taking advice from an experienced solicitor at the outset will ensure the agreement provides certainty and clarity, so that both sides can run their businesses with confidence.
If you are considering renting out desk space, check your agreements carefully to make sure you are allowed to sub-let. It is common for leases to prevent tenants from sub-letting part or all of a property. Even if you are an owner-occupier and the property is mortgaged, the terms of the loan may prevent you from sharing the space. Always check first, otherwise you risk putting your own tenure of the property at risk.
Why is a formal arrangement important? Under the Landlord and Tenant Act 1954 it is easy to inadvertently grant security of tenure to someone who is ‘just renting a few desks for a while’. Extending or agreeing terms over six months can result in protection for the tenant, whereby they have the right to renew their tenancy on similar terms - just as with a normal commercial lease. It can leave a landlord with unwanted guests if a casual arrangement is allowed to grow roots.
For lessees, moving can be expensive and disruptive, particularly if you have a workforce to move. You will likely want to know that your new office will be home for the foreseeable future. Carefully consider your future space, meeting, storage and privacy requirements - does the lease give you the security or flexibility you need?
If a mutually beneficial agreement can be found, sharing office space can be a great solution that utilises extra space, keeps costs down and provides opportunities for business growth. Getting the legalities right at the outset is key, to ensure everyone knows their rights and can occupy the space with confidence for the future. Contact our team today to find out more.