A Practical Guide to Signing a Managed Office Licence

Before relocating to a managed office, it is essential to comprehend the licence agreement, particularly since it operates differently from a conventional lease. For instance, while a leased office requires a legally binding lease, a managed office utilises a licence agreement. That is why it is crucial to understand how licence agreements function and what to ask before signing one.

This blog post is for entrepreneurs, business owners, and office managers who need a superior understanding of licence agreements and what to ask a managed office provider.

Understanding the Terms of Your Managed Office Licence Agreement

Licence Terms and Duration

A licence agreement is supplied by the managed or serviced office provider (at Pinnacle House, we refer to both interchangeably). It outlines various aspects, including the duration of the agreement.

Short-term agreements may span an initial period of 1 to 3 months, followed by a brief notice period of 1 month. A long-term agreement may specify a duration of 6 to 24 months. Licence periods rarely exceed 2 years.

Flexibility vs Legal Rights

In contrast to a 5-year office lease term, considerably shorter periods under ‘licences to occupy’ offer substantial flexibility for businesses uncertain about their future requirements. However, this reduced commitment does not provide a ‘right to exclusive possession’. This implies that, unless agreed otherwise, businesses cannot make significant alterations to the office or building for branding purposes.

Licences terminate upon the sale of the building by the landlord, unlike office leases, which provide tenants additional rights and protections.

Key Considerations Before You Sign

What should you ask before signing a managed office licence agreement? The adaptability of the agreement to either extend or terminate it early is vital. Extra or concealed costs, including service charges or other expenses beyond the monthly fee, are pertinent questions to address upfront. Avoid any surprises!

Examining the terms of the licence agreement, down to reviewing each clause, remains relevant. A licence fee may be an all-inclusive cost, or other expenses and additional charges may fall outside of it. For instance, utilities, internet access, and office maintenance, such as regular cleaning, can be extra costs.

Costs and Payments

Initial deposits or advance payments are typically required with a licence agreement. This may be 1 or 3 months, depending on the type of agreement.

Some workspace providers require various one-time setup fees. This relates to phone line connections, internet access, and the issuance of access cards for secure building entry, among other things.

The monthly licence fee confirms the cost and what is included. The acceptable payment methods are verified, too.

Late payment policies outline the penalties the licensee will face. The licence agreement should also confirm any long-term consequences for regular payment delays.

Office Space and Amenities Offered

The office space, layout, and size must meet your current and future requirements. Indeed, it is possible to occupy a second office for overflow or relocate into a larger, managed office later to accommodate additional staff.

For example, Pinnacle House offers many serviced offices, including Office 43, a 6- to 8-person office on the first floor at Pinnacle House Business Centre, for £950 + VAT per month.

An agreement may include business amenities, i.e. kitchen access, reception, lounge areas, boardrooms, training rooms, or meeting rooms. Several spaces are likely communal, whereas others, such as meeting rooms or boardrooms, are often bookable for an additional cost per session.

IT provision and IT support services are often included as well. Services such as ultra-fast fibre broadband or secure Wi-Fi internet provision to the office, along with related IT support services, are covered under the terms of the agreement. The internet speed may be mentioned, but outside of a fixed-speed leased line, it depends on the service quality assurances from the ISP.

Location and Accessibility

Address and Essential Services: the office location matters significantly. Staff must be able to reach it without an overly extended commute. Is the road network nearby good or typically congested? Are there any reliable public transport options? Other useful services include high-street banks, convenience stores, and local supermarket outlets.

Accessibility for Clients and Employees: are there enough complimentary parking spaces available? Are there bike racks to secure a bicycle? Are there any electric vehicle (EV) chargers available for people with electric vehicles? Pinnacle House features 2 EV charging points, as well as over 100 on-site parking spaces.

Neighbourhood Reputation and Safety: how secure is the area surrounding the business centre? Are security measures in place, like key fobs or swipe card systems, to prevent unauthorised building access?

Legal Considerations and Compliance

Who covers insurance responsibilities? Different types of business insurance are available, including employer liability insurance and public liability insurance. Does the licensor cover these under their insurance policy, or must the tenant arrange separate insurance policies?

Business rates, special local ordinances, and other regulations may be applicable. The licensor must clarify this to you.

Subletting policies are clarified, too. The ability to sublet part of a rented office is rarely, if ever, an option in a licence agreement. Even with a leased office, subletting is not an automatic entitlement.

Termination Clauses

Notice Periods – as part of the right to terminate, a notice period is required. The agreement confirms the time needed to notify the managed office provider prior to vacating. The requirements for terminating the agreement must be specified.

Early Termination – it is possible under certain circumstances. Financial penalties and additional charges typically arise when a licence agreement is terminated prematurely.

Office Condition and Restoration – restoring the office space to its initial condition remains mandatory under the licence terms. Should the occupant fail to fulfil these obligations, restoration expenses will be included in the final bill.

Renewal Options and Conditions

The opportunity to continue occupancy and renew a licence agreement relies on the flexibility built into the contract terms. Certain renewals may feature rental adjustments, including annual increases for inflation, calculated using official UK CPI or RPI figures.

To assist local enterprises, the managed office provider frequently prioritises existing occupants for continued access. This encompasses workspace expansion and allocation of supplementary facilities.

Expectations should be established regarding renewal timelines, administrative processing, and the communication of such information to the licensee.

The Pinnacle House Advantage

Selecting Pinnacle House delivers numerous compelling benefits that distinguish us from conventional office arrangements. Our comprehensive approach eliminates complexities typically associated with office management while providing exceptional value.

Our all-inclusive monthly fee covers utilities, including heat, light, and power, as well as comfort cooling systems. This transparent pricing ensures predictable monthly expenses without unexpected utility bills disrupting your budget.

The strategic location in Peterborough’s Fengate business area provides excellent connectivity, situated just 2 miles from the city centre. Direct access to the A1 and A47 enables seamless travel, while the 75-minute train connection to London King’s Cross opens up metropolitan opportunities.

Our facilities include ultra-fast fibre broadband, ensuring reliable connectivity. The staffed reception service, available during business hours, provides professional client interaction, while 24/7 secure access with CCTV monitoring ensures operations can continue outside traditional hours when needed.

What to Consider

While managed offices offer substantial advantages, several factors require careful evaluation to ensure the arrangement aligns with your business objectives and operational requirements.

The licence agreement structure means you will not have exclusive possession rights, limiting your ability to make significant modifications. This reduced control may impact businesses requiring specific branding implementations or specialised equipment installations.

Although flexibility of shorter licence periods provides adaptability, this arrangement offers less security compared to conventional lease agreements. The licence can terminate if building ownership changes, potentially requiring relocation with limited notice periods.

Consider your growth trajectory carefully, as expanding within the same facility depends on space availability. While we prioritise existing tenants for additional space, rapidly growing businesses might face constraints if suitable larger offices are not immediately available.

The shared amenities mean coordinating with other businesses for meeting room bookings. Peak demand periods may limit availability for important client meetings.

Additional Services and Potential Costs

Additional services, including mail handling, printing, and access to certain office equipment, are detailed in the agreement.

Concealed costs are found within some licences in vague terms and unusual references. Clarify these to avoid unexpected expenditures. Pinnacle House does not have concealed expenses in its agreements.

Service charges, including management fees, business rates, levies, and other miscellaneous costs, are relevant concerns. These often relate to the specific location or services utilised.

How does the Pinnacle House managed office licence agreement stack up? We offer highly favourable licence rental terms for our clients. Please contact us at info@pinnaclehouse.co.uk or call 01733 857600 to discuss your office requirements and to book a tour of our business centre.