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4 things a commercial landlord should look for in a tenant

Most commercial landlords will be quite choosy about who they take on as a tenant, and it’s certainly in their best interests to be so.

A commercial landlord should do a little digging and be a little nosey, delving into the business and financial background of a prospective tenant. A landlord can afford to be even more picky if the market is favouring landlords at that moment in time. When looking to seal the deal with a prospective tenant, landlords should partly rely on their intuition, and partly rely on their findings through research.

4 things a commercial landlord should look for in a tenant

So, what should you look for in a tenant if you have commercial property to let?

1) Do they have a sound credit history?

Look into the tenant’s credit history and general business background. Are there any loans outstanding? Have bills generally been paid on time? Is it a new business or an already established business whose finances are healthy? Get a clear picture of the tenant in light of their financial history, and use your findings to inform your decision.

2) Who is their guarantor?

Is the tenant part of a limited company, and if so, who are the shareholders and directors? You should establish whether you may require a guarantor for the tenant. A guarantor is often necessary if the business is not so well-established or if their financial footing is less stable, for example. Requesting a rent deposit is another option.

3) What is their business plan?

It is as well to know what their business plans are for the medium to long term, depending on how long you intend to let the property for. Is the business new? Is the business likely to thrive? Is the business in a ‘high-risk’ industry? Obtaining a business plan from the prospective tenant will give you an impression of what the future might hold for them in terms of financial stability, growth and expansion.

4) Do they have insurance?

When it comes to commercial leases, the question of insurance is a very important one. As a landlord, make sure you are properly covered, but you should also make sure that the tenant you choose is covered for public liability insurance. You will need to protect your interests and property investment, while your tenant will need to protect their business, and for this, adequate insurance is essential.

Before entering into any lease agreement with a prospective tenant, we always advise commercial landlords to seek legal and property advice.

As leading commercial estate and letting agents in the West End, the team at LDG can provide full support to Central London commercial landlords, whether you require help with acquisition, investment, disposals, or a valuation, get in touch with our commercial property specialists today.

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