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/ The Hidden Costs of Moving your Business

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Moving offices is an expensive business. Tenants often have to pay the following costs in respect of their new offices:

  • rent deposit
  • removal costs
  • fit out costs
  • furniture
  • stamp duty land tax
  • Land Registry fees
  • Solicitors fees

Ouch! Not to mention the considerable amount of management time taken up with moving offices.

A pitfall we often see to achieving a smooth and economical office move is not planning the broadband connectivity early enough. Typically, the internet supplier will need to carry out a site survey of the building to establish where it needs to install any new cabling - this takes time and needs to be booked in as soon as possible. Then, if the internet supplier needs to run cabling in the common parts of the building (i.e. outside of the tenant's unit), which is often the case, then both the internet supplier and the landlord of the building will want to enter into a wayleave agreement.

A wayleave agreement is a legal agreement whereby the owner of the building grants express rights to the internet supplier to install the cabling in the common parts.

Sounds simple enough but unfortunately, it is not quite that straight forward. Some landlords insist on having quite strict terms in the wayleave agreement which the internet suppliers are not always happy with, which can lead to protracted negotiations. Then there is the issue of cost. Landlords will insist that the tenant pays the landlord's legal fees in dealing with the wayleave agreement. These typically range from £2,000 - £3,000. Then there are the fees of the tenant's solicitors, which should be less, but nevertheless around £1,000.

Therefore, it is important to factor this possibility in early when negotiating the Heads of Terms for the new offices with the landlord and to insist that each party pays their own legal costs in respect of any wayleave agreement required. Usually landlords will accept this if it is raised at the outset and incorporated into the overall deal. However, if it is not addressed or discussed until after the lease is entered into, then it is very unlikely that the landlord will agree to pay for its own legal fees in dealing with the wayleave, and the landlord cannot be forced to.

So - always try and negotiate this at the outset in the Heads of Terms. However, we at RLS appreciate this is not always done, so we flag this as soon as we are instructed and try and incorporate this into our negotiations, but it is certainly easier to negotiate at the Heads of Terms stage.

/ our clients