- It's easy to blame the tenant when a commercial lease goes wrong
- Here are 7 pieces of advice for the early stages of a tenancy
- Follow these, and you should lessen the issues later on
In commercial leasing, the emphasis on a successful relationship between a landlord and their lessee is usually laid at the door of the tenants’ conduct.
However, the fact that lots of fruitful relationships go south in the early stages of the tenancy shows us that if the landlord could make the tenant feel more welcome from the start, lots of potential issues could be nipped in the bud.
Here are seven proven ways to welcome a new business into your most valuable asset.
1. Communicate – Communication with your stakeholders is a precious asset that will set you up for success with the new lessee. Responding to emails, texts, calls, and social media messages timely is essential. Moreover, when you have a business owner/manager carrying the stress of moving into a new property, receiving the extra care and service will set you apart.
2. Be available – offer the new tenant your time if they have any concerns about the property they have just started to occupy. When you can help them resolve one of their many challenges, they will remember, and you build relationships based on trust for the remaining term and further term(s) of the tenancy.
3. Meet in person – yes, we are operating more and more in a digital, standardised, and automated manner. However, a new lessee will appreciate knowing the owner’s representative’s face, and they will enjoy meeting with you. If they report maintenance issues and believe the asset works, drop in and how them how it works. You can also meet up with a specialist, such as a crane technician or air conditioning specialist.
4. Do an annual inspection in the first few months of their tenancy – the whole purpose of visiting your portfolio’s properties is to assist tenants with any issues and build relationships with your clients by reporting back to them on their valuable asset.
Tenants will appreciate it when you go on-site, show an interest in their business, and provide them with a report for their records as well. Do not forget, most of the time, they will reimburse your client for the management fees and, as such, have reasons to expect personalised service.
Besides that, a lessee today could become a landlord tomorrow. I have managed tenants who vacated the property because they purchased another property from a sales department colleague. In some cases, they could buy the property that they lease. Should the new owner leave the property in the future, they might remember you and may contact you to manage it for them as you impressed them when they were tenants.
5. Provide lease documents, budgets and other information as required – knowledge and understanding of what is expected from the tenants is essential for a good relationship with the tenant. When you are upfront, they will better understand their rights and obligations, and the new tenancy will have fewer grey areas or disputes in the future.
Start the lease negotiations with a clear Offer to Lease or Head of Agreement, followed by a clear lease detailing what was agreed. Send all this information to the tenant for their records, including any backup information like the initial budget. Invite them to contact you should they have any doubts.
6. Provide them with a copy of the Property Condition Report (PCR). Follow up to see if they have received it and invite their feedback. Fixing issues early on will set up the right relationship. The famous phrase “but the property is in a much better condition now versus how it was at the start of our tenancy” can easily be avoided by handing over a well-detailed PCR with photos and get their feedback at the start. The report will also protect them should a landlord try to include pre-existing items in the tenancy.
7. Early stages of rent arrears – If new tenants fall in arrears for the first time, do not send them an automated message. Instead, give them a call and find out what the issue is. Most of the time, it is an initial administrative issue, and talking to the tenant will set you up the right way to organise the direct-debit and provide the bookkeeper’s email address.
The administrator may not have been involved during the negotiation phase and did not know that the first rental payment was due. Communication is crucial and could be the tool that will be the start of a long term and fruitful relationship for all internal and external stockholders involved.
Although there is never a guarantee that a new tenancy will have no or limited issues, using these seven steps will contribute to a successful relationship with your tenant.