Why Landlords Should Consider Fit Out Finance

In today’s competitive office market, traditional landlords must adapt to stay ahead of the game. By offering high-quality, fitted-out spaces, landlords can differentiate themselves from competitors and attract lucrative tenants.

Fit out finance plays a crucial role in this strategy, enabling landlords to optimise their investment by spreading costs and minimising upfront expenses. This approach not only enhances the appeal of office spaces but also positions landlords for long-term success.

In this blog, we take a deeper look into office fit out finance and how it can benefit landlords. As you will discover, there are a number of advantages to investing this way, from tax savings to higher rental yields.

Read on to learn more about why finance can be a game changer for ambitious investors like you…

What is Office Fit Out Finance?

Before we begin, it’s important to summarise what fit out finance is.

In short, finance helps landlords to fund the cost of a fit out or refurbishment. The financing option involves a loan, enabling landlords to spread the cost over a specific period and avoid a large upfront payment.

But that’s not all. Here are some of the key benefits for landlord:

Create the Perfect Tenant Ready Space

Many tenants require a fully fitted, serviced office space ready for immediate occupation. With elements like furniture and tea points included, this saves them paying out for further CAT B office fit out costs that impact their bottom line. It also helps them to settle in quickly with minimal downtime if they are relocating.

As you can spread the finance repayment over time, you can invest in elements like these to create a perfect tenant ready space. This will increase the property’s attractiveness and help you appeal to a wider pool of potential tenants.

For example, one of our clients at Riverbridge House in Kent was able to attract a tenant by creating the ideal serviced office. It includes an open plan workspace, breakout area, tea point, refection areas, and two meeting rooms. See the Riverbridge project here.

Related content: What’s the Difference Between a CAT A and CAT B Fit Out?

Reduce Vacancy Periods

Following on from the point above, using finance to create a ready-to-occupy space will also minimise vacancy periods. A vacant property means lost rental income, so it’s important to do as much as you can to create a magnet for potential tenants.

While investing in features like furniture and tea points will ultimately cost more compared to a CAT A office fit out, you can start covering the repayments faster with an occupied office. This makes investing with finance a more calculated risk, especially when you benefit from the security of a tenancy contract.

Cover Finance Repayments with Rental Income

As mentioned, once you’ve attracted a tenant, you can cover the finance repayments with your monthly rental income. With the rental income covering the finance repayments, you can preserve your capital and invest in other profitable business opportunities.

Additionally, the interest rate is fixed, meaning you won’t face large payment spikes that drain your financial resources. This also reduces the risk and can help you budget when investing in workplace elements.

Increase Rental Income

Without the need for a large down payment, you can take on a more ambitious project. The benefit of this is that a well-designed, modern office space can attract premium tenants willing to pay higher rents.

Charging a higher rental income will fully offset the cost of the monthly repayments. Moreover, landlords can benefit from a tenancy contract to ensure the repayments are covered, mitigating any risk.

Finance is Tax Deductible

Another good aspect of office fit out finance is that all repayments (both the capital and interest) are 100% tax deductible. This is a major plus is you are an investor, as you can retain more capital and distribute it other investment opportunities that generate high returns.

For cash-rich investors, this is particularly beneficial as they have a larger taxable income to offset. So, by financing through a tax-deductible loan, they can preserve high cash reserves and boost cash flow.

100% Financing Available

Undertaking an office fit out is a multifaceted process, from design and construction to furniture procurement. Fortunately, fit out financing covers all aspects, including fees, design, labour, and delivery.

This streamlined approach provides a fixed monthly or quarterly payment, surpassing the limitations of traditional cash-based methods, where tax relief is restricted to specific assets.

Fixed Rates to Help You Plan and Budget

With office fit out finance, enjoy the stability of fixed, affordable repayments. This eliminates the risk of unexpected cost increases due to rising interest rates.

By maintaining consistent budgeting, you can confidently plan your project and financial future. This will give you peace of mind when embarking on an office fit out project.

Outro

The current office market is more competitive than ever, with traditional landlords facing challenges from coworking spaces and the rise of remote work. As we’ve covered in this article, fit out finance empowers landlords to stay competitive by providing flexible payment terms and avoiding significant upfront costs.

Ultimately, this strategic approach enhances investment potential and reduces risk, giving landlords confidence with their projects. As we’ve seen with our own fit outs, eye-catching and practical offices attract tenants, so combining a smart investment strategy with an attractive design is the key to success.

Check out our fit out projects here.

Are You in Need of an Office Fit Out Company?

If you’re considering finance for your project, then it’s likely you need a good office fit out company too. At Rap Interiors, we’ve been fitting out workspaces for landlords for over 30 years, helping them to generate strong returns on their investment.

To book a consultation to discuss your fit out please call 0333 600 1234 or fill out the enquiry form below.