Feb 9, 2015 Blogs

Types of Office Rental Agreement You Should Know

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In this uncertain scenario of fluctuating property prices, renting a commercial space, may seem a more prudent option. It can be a big liability too, if you consider that the terms of your lease can dictate your success or failure. It is imperative that, you have a perfect understanding about the lease and its terms, before you put your signature on the dotted line. The factors that influence your decision are amount, length and physical space incorporated in the lease.

Types of property rental agreement

1. Leasing
Leasing is the first choice for businesses looking for office space. A lease office rental agreement can be a short or long term one, ranging from month to month options to annual lease agreements. Longer leases that were for 25 years are now in the range of 3 to 5 years. Its terms would most probably reflect the market conditions prevailing at the time of entering into the lease.

The rent, notwithstanding, other areas of the contract that you should scrutinize are the service charges, length of the lease, break clauses, dilapidations, and service charges. Here are some of the types of office rental agreement you should know.

Lease type
One can always select from different lease types, but remember that the one you choose should be flexible and will admirably suit the business you are in.

Short Term or Annual Leases

This is ideal for those businesses that cannot predict their future. A short term lease is the right answer for such people who live by the day, and are not planning a long stay. Moreover, they have respite from the bogey of a long contract. Businesses opting for this type of agreement need to prepared for rental hikes affected by market inflation.

Long Term Leases
These agreements are not flexible like the short term term agreements. Such arrangements have a long lock-in period and low rentals but a heavy down payment or deposit required by the landlord.

2. Licence Agreement
If, however, you are looking for office space just for a short stint, to complete a new contract, it is better that you consider getting into a license agreement with the landlord, rather than go in for a lease. This proves an ideal answer for both sides, with the flexibility to mutually terminate the contract without hassles. On the flip side, the right to automatic renewal of the licence stands revoked.

Advantages of Rented Office Space

Renting an office space is an ideal option for those who want to set shop in an instant. The added advantage is that they come reasonably priced, are fully equipped with basic IT hardware, furniture and accessories to start work without hassles on day one. You have another advantage of writing off the expenses involved as a commercial expenditure. An office rental space with everything in it, including services is any businessman’s dream.

How Flexible Rental Agreements Help You?

Negotiating a flexibility clause with your landlord can be quite a difficult process and the additional clauses that form part of such an agreement may prove distressing to negotiate. However, these clauses will certainly cover the risk of unfavourable conditions that can crop up in the future. Take great care in the negotiations, and incorporate helpful clauses that can stand you in good stead in volatile market scenarios.

Serviced Offices, Plug And Play Offices and Meeting Rooms

The entrepreneurs today, are now, more than ever, conscious about start up and other costs that can make or mar their future. Serviced offices offer a flexible alternative for you to adopt and take your business forward on a cost effective basis, without worrying. Remember that the services and facilities are part of the cost you pay and can adjust with your changing business priorities.

Today, businesses are experiencing the benefits of creativity in the form of offices that are fully equipped with not only networking facilities, but also telephone systems and services that can propel you to start without delay. You also have access to what are called “plug-and-play” offices, where literally, you can just move in and start working. If you need any help in understanding a rental agreement, tweet your query @ikevaindia.

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