How to Avoid a Rent Increase!

Cafe Cost Control | 4 steps to avoid a rent increase for your cafe premises

As any cafe owner will know, the lease is god, so to speak! Rent rises can wipe out any small profits you are making if you’re not prepared and the owner senses you are making some money.

From a landlords point of view, they are trying to maintain a high return on their investment so any way to increase their yield, they will jump at it. At Black Market Roasters, we have experience in dealing with these issues as we have operated a number cafes and have a panel of experienced professionals who advise us on how best to tackle such a situation.

There a number of ways to mitigate the risk of an unforeseen rent increase:

1. Start off with a long lease with options – This tactic of a 5+5+5 minimum lease, means you will be around for a long time if you choose to, so a landlord will be more likely to form a better relationship with you

2. Cement as many CPI increases as possible – Within your lease you can negotiate how an annual or more rent increase will be determined. If you fix a CPI increase for as many of the option periods as possible as opposed to market value, then you may have a more ‘fair’ valuation system.

3. Negotiate market value rent increases 6 months before option expiry – Before you give notice to exercise your option to stay, you have a right under s32 of the Retail Leases Act to have the market rent determined early. This way you can get the Landlord to show their cards before committing to a longer lease.

4. Take note of the market rent in the area – The landlord is not allowed to increase the rent above a fair market value of the property. So keep note of shops in your area, what their rents are and how long they are vacant. This way you have evidence of what rent should be in your area.