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What to do and understand when you take over a business (leasehold) in Tenerife?


Most people when they purchase a business in Tenerife buy a leasehold commercial property. The reason for this is that a leasehold business is always cheaper than buying the freehold business outright. We have endeavoured to explain in this article what a leasehold business is and what you need to be aware of when you decide to pack up your life in your home country and move to Tenerife.


When you have chosen the business that is most suitable for you, the landlord, who owns the freehold of the property, will normally start a new contract for the premises in your name. There are a number of points in the contract that can be negotiated and we will be happy to help you. Having been in this situation ourselves we know the ins and outs of all the clauses and with our help you will be able to agree on the most advantageous terms. As your Estate Agents we will also be an invaluable source of information and advice, once you have purchased your new business.


A leasehold business is for a certain amount of time and gives you the right to rent the property from the landlord for the duration of that time. The normal length of a leasehold contract is 5 to 10 years. You will have to pay a refundable deposit when you sign your new contract, and this is normally equivalent to two-three months rent.


When you buy a leasehold business in Tenerife, the price that has been quoted by the estate agent is paid to the person that is currently running the business, not the landlord (although sometimes they are the same person). It is normal that the landlord will get a percentage of that fee, and the amount of this share is one of the factors that may be negotiated when a new contract is started. Unlike a lot of other countries, when your contract is renewed, you will not have to pay another fee to the freehold owner.


If you buy the leasehold of a business that is not currently trading, then the price that has been set by the landlord will be to cover the value of the fixtures and fittings. In addition to this, you will also have the cost of renewing the necessary licenses for the business type that you are opening with the local authorities.


Included in the leasehold purchase; are the fixtures, fittings, goodwill (if the business is operating) and the legal costs of processing the paperwork for the lease. The monthly rent for the premises will rise during the term of the contract; however this is fixed by law, at the rate of inflation. When you renew a contact, however, the landlord may raise the cost of rent by up to 20%.


When you sign a contract, you commit yourself to various responsibilities. You will agree to pay the rent regularly as well as other costs. These include your local taxes, rubbish collection and the community fees for your premises. You are also responsible for ensuring that all the relevant licenses for your business are in place and that your business complies with the local laws related to the type of your license. As well as local laws, you must also ensure that your business is working within the regulations of your the community.


As a leaseholder, you have the right to change the decor, fittings and furnishings in the property, but you may not be able to make structural alterations without the written permission of the freehold owner. Major repairs and structural work is the sole responsibility of the landlord.


There are many things to consider when buying a leasehold business in Tenerife and we will always be here to hold your hand every step of the way. If there is any further information about leasehold and freehold businesses in Tenerife that you need, then please feel free to contact us.


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