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Morgan Pryce, the London based commercial property agent, has seen a sharp rise in the number of unrepresented tenants who are being caught out by large business rates increases that they had not anticipated when signing a new lease. In agency parlance, unrepresented means a tenant dealing directly with a Landlords agent without having specialist advice from an agent acting solely on their behalf. With the growing power of the Internet, it is more common for tenants to try and bypass the traditional acquisition model in favour of carrying our search and negotiation solo. This obvious, but unfortunately often short sighted approach, is leading to a plethora of mistakes in the cost analysis of a potential lease which can have a dramatic effect on the overall cost of ownership.
“It is definitely the case that we are receiving significantly more calls from panicked tenants who are looking for advice from our London Business Rates review team following dramatic and unexpected increases in rateable values on their London offices confirms Sally Brough, Associate Director with Morgan Pryce. “Whilst a specialist agent would check this type of information before advising their clients on whether to proceed with a lease or not, it is true to say that most Landlord’s Agents are not exactly falling over themselves to point out potential increases in costs further down the track. Frankly, it is usually not in their interests to do so as the landlord is their client, not the tenant.”
A recent incident involving a tenant in Berkeley Square House, on Berkeley Square, highlights the issue well.
“I was representing a tenant who was already in the building, in Serviced Office accommodation, and who had found a small unit in Berkeley Square House available on a conventional lease.” says Tom Lax, Agent with Morgan Pryce. “The client was switched on enough to realise that they should have a professional check over the deal they had done with the Landlord, before signing, and a quick call to the Rates office confirmed that whilst the current rates on the unit were indeed £11 per square foot, as correctly detailed by the Landlord, the ratings office had already served notice of a stepped change in the rates that would see them rise to £19 a square foot over the next 4 years. This represented an enormous increase in the cost of ownership and the client pulled out of the deal.”
In some instances, this type of incident can have far reaching and damaging consequences for a business and for the money saved by not using a professional representative, the risks seem disproportionately high.
Morgan Pryce is a commercial property agent based in Oxford Circus in Central London. They specialise in Search, negotiation, Project management and Business Rates reviews. If you have a problem with Business Rates, give the BR team call on 0207 292 4710.