Property Licences

6. Costs

When comparing premises, use the total cost (not just the rent) per square foot as a yardstick.

Extra costs, and particularly service charges, can be high.

6.1 How much is the monthly licence fee or rent?

• Is it fixed, or does the landlord have the right to increase it? Some agreements give the landlord the right to increase the rent, with one month's notice, after a fixed length of time. Most landlords are unlikely to raise your rent, as the licence will only be for a short period.
• The rent should usually include the uniform business rate and most services - eg, heating and reception costs (see 2.3).

6.2 Find out whether VAT will be charged on the rent.

This will depend largely on the building and on the landlord's financial and business circumstances.

• If the rent does not include VAT now, the landlord may decide (or be compelled) to charge VAT at some future date, even though the licence does not say you have to pay VAT. Your rent will then rise (but if you are registered for VAT, you will be able to claim the VAT back).

6.3 Will the charges for facilities and services not included in the licence fee be reasonable?

• How are these charges going to be calculated? For example, does the landlord add a mark-up, in order to make a profit on telephone calls, or will you pay the standard rate? Is there a minimum charge for any service, even if you do not use it (eg the photocopier)?
• How are the charges for utility services measured?

6.4 Will you have any setting-up costs?