Relocating to Leased Offices? Beware Hidden Fees

When considering new leased offices, it’s essential to do your homework before you up sticks. In the first instance, read the lease agreement. As a legally binding contract, it makes sense to read the small print – carefully.

Keep an eye out for the following hidden charges and costs you could encounter:


1. Service charges

Are you liable for service charges covering building maintenance? Check costs if you are. Also bear in mind that service charges are usually subject to an annual increase of between 5 and 10%.


2. Office alterations

Want to make changes to the office space? Whilst non-structural alterations to the office may be simple and quick to install, look out for extra costs. You’d need to obtain formal consent first, and pay for a ‘License for Alterations’ to be added to your lease document. Typical costs range from £750-£3,000.


3. Premises survey

Avoid a bottomless pit of costly problems later by arranging a survey of the building’s integrity first. Especially if the lease is a fully repairing and insuring one, it’s essential to deal with any issues before you sign on the dotted line.


4. Schedule of Conditions

There’s nothing worse than moving into a less than perfect office at the start of a lease and then having to pay for those issues when you move out. If not fully refurbished, make sure the office condition is documented by photographs with written comments alongside.

It’s worth drawing up a Schedule of Conditions (agreed by both tenant and landlord) and appended to the lease. Forking out up to £2,000 now could avoid incurring thousands of pounds of liability later.


5. Dilapidations

You have an obligation to return the office to the condition it was at the start of your lease. That means being responsible for any dilapidations incurred during your stay. Disputes can cost thousands – so always document the condition at the start, and expect the expense to be between £5 and £20 per sq ft of the net floor area.


6. Rent increases

Inevitably, competition for prime locations has a knock-on effect on availability and consequently costs such as stamp duty and business rates.

It’s key, then, to be aware of potential rental increases. Remember, business rates stem from a percentage of a building’s Rateable Value (RV), and then scaled against the percentage of occupation within the building a tenant leases.


With any office move, there are plenty of hidden pitfalls lying in wait. The trick is knowing what they are, so you can dodge financial headaches later on.