Legal Chat Radio Interview - Commercial Property Letting to a tenant without a Track Record
Choosing a tenant
As a landlord finding the right tenant can be challenging. Things can be even tougher when your potential tenant has no previous track record for you to inspect. How do you know whether it is worth the risk to enter into an agreement with the tenant or not?
Find out what you can do to protect yourself in this latest Legal Chat with Parfitt Cresswell radio interview with Commercial Property expert Steve Cook
The below text is a summary of the questions and answers from the above radio interview.
What type of references should landlords obtain for a prospecting tenant?
The landlords should try and obtain references to know if the tenant is able to pay for the rent of their property.
The references that the landlord should look for would be bank reference which outlines whether the bank thinks that the tenant would be able to pay the rent.
Another indicator for the landlord to acquire would be an accountants reference which is useful for when the business has been operating a long time but not for a start-up.
A trade reference is a good tool for a landlord as it shows the relationship that the prospective client has had with other businesses. It allows the landlord to know whether the client has made all payments for products/services and whether they paid it on time. It is recommended to get 2 or more of these references.
A personal reference is good to know about the character of the tenant and what they are like on a personal level.
This is likely the most crucial reference for a landlord to review. It tells them how someone in their same position thought of the client and whether they had any issues with them.
Can a landlord visit their commercial property during a tenancy?
Yes. The landlord has the right to visit their property under the terms of the lease but they also have to let the tenant have quiet enjoyment of the property which means that the landlord shouldn’t really visit the premises more than once a quarter.
Can a landlord charge a rent deposit?
Yes. If a landlord wants a bit more security when renting out to a tenant who has only recently started a business, then the landlord can charge a rent deposit. Commonly, this is a 3-6 month charge of rent paid upfront once the lease is signed along with the standard rent. The landlord then holds onto that money and is only used when the tenant does not pay rent for a certain period. The tenant will then have to add to the deposit with the amount of money that they did not originally pay (plus interest). Once the lease has been completed, the tenant will receive their money from the deposit.
Can a landlord get a guarantor for a tenant?
Yes. A landlord can require a tenant to have a guarantor as an extra layer of security for the landlord as the guarantor would pay the rent of the tenant if the tenant was unable to do so.
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