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jones87

Hpi? What About Commercial Property Inflation?

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Currently looking for a 1,000sqF+ retail shop to rent and seeing some of the rents I was curious to know how much commercial property has increased in value?

I'm new to commercial property so hearing about "rent free periods" and "self repairing" is all new to me.

I also noticed some properties we're for example: £20,000pax or £240,000 freehold, which makes me assume they value commerical property at 12x rental income?

So many shops are empty in shopping centre's and area's around me, it's no surprise when you see the rents being asked

Should we expect commercial rents to come down only as land values come down? Is there any correlation between HPI and commercial property inflation?

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Currently looking for a 1,000sqF+ retail shop to rent and seeing some of the rents I was curious to know how much commercial property has increased in value?

I'm new to commercial property so hearing about "rent free periods" and "self repairing" is all new to me.

I also noticed some properties we're for example: £20,000pax or £240,000 freehold, which makes me assume they value commerical property at 12x rental income?

So many shops are empty in shopping centre's and area's around me, it's no surprise when you see the rents being asked

Should we expect commercial rents to come down only as land values come down? Is there any correlation between HPI and commercial property inflation?

Defnitely a strong correlation - off of this has been driven by kow inetrest rates that have just bubbled up pricing - to the point where operating a business in these places is simply not viable, going rental and upping sticks time and again is not an option for many businesses so the headlne price can and does destroy business.

Be really careful of full repairing leases - could be a financial death warrant in the wrong circumstances.

Edited by OnlyMe

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You should not be scared of negotiating hard on a rent free period etc at the moment. There is lots of vacant property. Try to get the headline rent down too, though this can be more difficult, as the headline rent will effect the freehold value of the property, but if you push for that, they will be more lenient on a rent free period, as it is a discount without dropping the headline rent.

Commercial property has crashed more than resi, though I don't know how much it has bounced back yet. Others will tell you. SNACR for one.

My gut feeling is that in future, with the CGT squeeze that the coalition is trying to push through, yield will become more important fo property investors, therefore pushing them away from low yielding BTL and possibly towards commercial, which traditionally offers higher yields.

Also, make sure you put a break clauseinto your lease on the shop, so you can get out after 2 years if it goes t*ts up!

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Be really careful of full repairing leases - could be a financial death warrant in the wrong circumstances.

I thought it was next to impossible to get anything but this on a long commercial lease

tim

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Well the Market is still in a shockingly bad state, but the llords have been desperately seeking to hold on to headline rentts, just with greater incentives. I think this cannot continue as there are too many vacant. We have recently secured large tents frees and lower headline rents than were agreed on the same premises 10 years prior.in terms of an fri lease, they are not a big issue providing you have a schedule of condition done prior to signing the lease, this will ensure you have to maintain the repairs to how the building was when you took it rather than for existing defects. Thiscan save Money at the lease expiry

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Well the Market is still in a shockingly bad state, but the llords have been desperately seeking to hold on to headline rentts, just with greater incentives. I think this cannot continue as there are too many vacant. We have recently secured large tents frees and lower headline rents than were agreed on the same premises 10 years prior.in terms of an fri lease, they are not a big issue providing you have a schedule of condition done prior to signing the lease, this will ensure you have to maintain the repairs to how the building was when you took it rather than for existing defects. Thiscan save Money at the lease expiry

Unless something significant is missed, say some structural defect. So a full strucutral survey and knowledge of any previous insurance issues etc would be well advised. You can easily be left on the hook for soemthing really nasty if you are not careful.

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I havn't got a solicitor onboard yet as I'm still in the preliminary stages.

From what I've read, rent free period's are a way for the landlord's to stick to their headline rate, whilst essentially reducing it :rolleyes:

For you experiended readers, what rent free period's are you getting and for how long a lease/break clause?

I'm right in thinking I'm expected to pay professional fees, and 3 months rent upfront, is this usually the case?

Thanks.

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  • 261 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
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