As businesses continue to grow and evolve, one of the most important aspects of their success is finding the right commercial space to operate in. In South Africa, this involves signing a commercial lease agreement, which is a legally binding document that outlines the terms and conditions of renting a commercial property.
As we enter 2018, several changes have taken place that businesses should be aware of when entering into a commercial lease agreement in South Africa. Let`s take a closer look at some of these changes and how they could affect your business.
1. VAT Increase
The Value Added Tax (VAT) rate in South Africa was increased from 14% to 15% effective April 1st, 2018. This means that all commercial lease agreements signed on or after this date will be subject to the new VAT rate. It is important for businesses to incorporate this change into their budget and cost projections, as it will likely have an impact on their overall expenses.
2. Renewal Options
In the past, commercial lease agreements in South Africa often did not include renewal options, leaving businesses uncertain about their future in a particular property. However, recent changes in legislation have made it mandatory for landlords to include renewal options in their lease agreements. This provides businesses with more security and allows them to plan for the long-term.
3. Increases in Rental Rates
With the increasing demand for commercial properties in South Africa, landlords are taking advantage of the market to raise rental rates. Businesses should be aware of this trend and negotiate their lease agreements accordingly. It is important for businesses to do their research and understand what the market rate is for the type of property they are interested in, in order to negotiate a fair rental rate.
4. Environmental Legislation
In recent years, South Africa has become more environmentally conscious and has implemented legislation to support sustainable practices. This includes regulations that impact commercial properties, such as energy efficiency standards. Businesses should ensure that their lease agreements comply with these regulations, as failure to do so can lead to penalties and additional costs.
In conclusion, as businesses look to secure commercial properties in South Africa, it is important to be aware of the changes that have taken place in 2018 that could affect their lease agreements. By understanding these changes and negotiating accordingly, businesses can secure a space that meets their needs and supports their long-term growth.