What Are the Various Commercial Lease Types in India?
While considering leasing a large business facility, you must be psychologically ready because it is a tremendous endeavour that involves substantial monetary expenses. When renting a commercial space for the first time, it is critical not only to thoroughly study the market but also to have a clear understanding of the many types of commercial leases available in India.
There are three major types of commercial real estate leases in India. While the terminology may vary from place to place, having a general understanding of the principles can help you negotiate the best possible offer.
The three forms of commercial leases in India are as follows:
Total Lease
It is also known as a full-service lease since the landlord is expected to pay for all property-related expenditures out of the rent paid by the tenant. Insurance, upkeep, and taxes are examples of such expenses.
Whereas the landlord is solely responsible for the structure, the tenant’s responsibility is to concentrate entirely on the company. It is typically utilised in multi-tenant buildings.
Lease on the Internet
A net lease is a commercial real estate lease in which renters must somehow spend for the area they have leased, but also have a contractual arrangement in which the lessee must pay a portion or all of the property’s taxes, insurance costs, and maintenance charges in addition to the basic rent.
There are three types of net leases: single net lease, double net lease, and triple net lease. One of the primary advantages of the net lease is that renters may greater manage their spending by tracking how resources are being used. They are simply obligated to pay the real property tax and the cost of maintenance. They may be able to save money if there is no need for substantial upkeep or if property taxes decline.
Gross Lease Modification
Although it is similar to gross leasing, there are several variances. Even though the rent is paid in one single amount, there is still room for negotiation between the parties. The agreement’s parties can discuss the expenditures that will be included in the base leasing fee.
Furthermore, charges like cleaning services and energy are not included in this list. The modified gross lease appears to be the most common across renters since it is tenant-friendly. Corporates prefer modified gross leases above others because they are not responsible for office building maintenance.
In a nutshell, each kind of commercial real estate leasing offers advantages and disadvantages. Based on your budget, you must choose which option is best for your company.
Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.
