- It can help you financially by providing extra funds to go towards the high cost of renting commercial or retail premises. This is especially beneficial during tough economic times.
- By streamlining your business so it uses less space, you can sublet the spare space to help meet ongoing costs. This way you are able to keep using the premises without the need to relocate the business.
- If you need to move, due to business expansion, transportation access etc, you can avoid lease termination costs simply by subleasing the old property. (Another option in this situation is to transfer or assign the existing lease)
The negative aspect of subleasing.
- In the end you are responsible for the original lease in its entirety. This means should the sub tenant fail to pay rent due or any costs stated in the sublease agreement; it is your responsibility to meet the costs of the original lease to the landlord. However, you are permitted to take steps to recover those costs from the sub tenant.
The positives from the sub tenant’s point of view;
- You will find the set up and ongoing costs are often much lower as a sub tenant.
- It is often more straightfoward to get approval for a sublease.
- Starting a new business may only need a small space which is often hard to find, forcing you to start up in a premises bigger (and more expensive) than you need. Subleasing may be a way to secure the use of the right amount of space for a cost effective rent without having to commit to more space than you actually need.
- It is quite likely the premises will already be fitted out negating some set up costs.
- Generally there will already be kitchen and toilet facilities on the premises which can be shared.
- Maintenance costs can be split so reducing expenses.
- You may be able to add sharing services (such as internet, equipment or reception services) to the sublease agreement to cut down on expenses.
Some negatives from the sub tenants point of view;
- You may not be able to secure a long term lease as a subtenant.
- you might have to agree to certain terms and conditions that you wouldn’t normally agree to. This may be a compromise you make to get the cost reductions you require.
- You are likely to have limited freedom to make alterations or use signage on the premises as the landlord is wholly responsible for the original terms of the lease and the premises condition.
Summary
Subleasing can be both good and bad, however if you can put an agreement in place that both you and the original tenant can agree on it will be a more positive experience for everyone involved.
For an easy to use and editable sublease agreement template please visit;
https://www.rpemery.com.au/online/commercial-sublease-agreement.html
