Capital Expenditure (CapEx)

Capital Expenditure (CapEx)

Site Acquisition Costs

This figure can range hugely depending on a number of factors; the existing condition of the property, the specification of shop fit required, even how much work the contractor has on. Keep an eye out for well fitted properties where you can resuse AC, lighting, flooring, even some of the fixtures and fittings

Tip - Taking on a 'shell' unit is more expensive so try and push these costs onto the landlord, if not then ask for the equivalent sum in rent free.
If you want to make alterations to the property like removing stud partitions, installing fitting rooms or putting in a WC you are likely to require a Licence to Alter from the landlord. You'll need to submit shop fit plans for the landlord to approve in order to obtain the Licence to Alter. These will cost between £1,000 - £3,000.

Tip - only look into this once solicitors have been instructed. The landlord may well have floor plans already from previous tenants and should share them with you, so ask!
Only structural / shop front alterations tend to require planning consent. Unless the building is listed. To obtain consent you need to make an application to the local authority. Plans are required showing your proposal and these a drawn up and submitted by an architect, the cost of which ranges from £1,500 - £3,000.

Tip - make your offer conditional upon obtaining planning consent if you think you will require it. Look up Agreement For Lease in Glossary.
Solicitors fees range from £4,000 - £6,000 depending on what is required.

Tip - solicitors do not usually visit the property, so use a solicitor based outside of London as they are generally cheaper.
Recommend getting a pre-acquisition survey carried as it's likely you are to become liable for the condition of the property. Range from £800-£1,800 with a 2-3 week turnaround time.

Tip - Make your offer conditional upon getting a survey done. Only instruct a survey to be carried out once you have agreed terms with the landlord.
Surveyors can represent you to find a property and negotiate terms on your behalf. The cost is £5,000 +. Hatch gives you the tools, support and guidance you need to be able to do it successfully on your own at a fraction of the cost.

Tip - choose a subscription package and level of service that suits your needs.
SDLT is applicable on new leases and assignments. Calculated as a % of the total rent you pay over the lease term.

Tip - keep the lease term short (5 years or less) for a tax saving.
Landlords often request depsoits equivalent to 3-6 months rent as reassurance that the terms of the lease will be complied with. Not just rental payments but also service charge, maintenance, reinstatement etc. The more established the company taking the lease the less deposit is required.

Tip - this is dead capital, so try not to pay one and if the landlord insists then compromise on an early release mechanism such the 'Profits Test'.