Gross and Net Rentals, the difference

Gross rentals include the net rental as well as the operating costs, which include costs like building insurance, maintenance and property rates. Utilities, or running costs such as water and electricity, are always an additional cost and are not included in the gross rental. 

A triple net lease, usually more common in new commercial properties, involves the least risk on the part of the landlord. The tenant is responsible for all the operating costs, including structural repairs and exterior maintenance, as well as the base rental.

Escalation rates

Rentals on leases terms longer than one year escalate by a fixed percentage  each year on the inception, or anniversary date. Escalations vary depending on the duration of the lease, generally the longer the lease the lower the escalation rate can be. 

Right of first refusal

This pre-emptive right can be included in a lease agreement and offers the tenant the opportunity to purchase the property without the parties having to agree to a price beforehand, and gives the tenant the opportunity to purchase the property first before it can be sold to anyone else. The right is usually subject to certain conditions including a timeframe.

Due Diligence

A purchaser may request a period of due diligence in order to examine and investigate a property or all the paperwork relating to a property purchase. The purchaser may later request a reduction in price or the right to terminate the transaction based on their findings.

FAR

FAR, or floor area ratio is determined by dividing the total area covered by the building by the total area of the ERF or stand on which the building is built.

Coverage

The total size of the land area that can be covered by a building as seen from directly above and measured from the outer of the exterior walls. The measurement is expressed as a percentage of the land area and includes all roofed areas.

Industrial Zoning

Industrial 1 refers to normal warehouse, storage and factory operations.that don't cause a nuisance to neighboring properties.

Industrial 2 accommodates heavier industries whose operations may result in noxious gases and can include foundries.

Industrial 3 caters for workshops, mini units and lighter industrial applications.

  • YouTube
  • LinkedIn
  • Twitter - White Circle
  • Facebook - White Circle
  • Instagram

Bedfordview, Gauteng

All pricing excludes VAT

E&OE

© 2020 by Mendace Properties  (Pty) Ltd