What are the Advantages and Disadvantages of Leasehold Offices?

Leasehold offices, also referred to as conventional offices, are one of the most common types of commercial property available. They are often chosen by businesses looking for a long-term tenancy agreement, as leasehold office space confers tenants more rights and privileges that licensed space. Some of the key advantages of leasehold offices include:


  • Extended rental period: leasehold offices are rented out to occupiers who need a long-term office space solution. This eliminates the need of having to extend or renegotiate the lease terms every year and of looking for alternative office space frequently.

  • Flexibility: it is common for leasehold offices to be unfurnished. This means that the occupier can choose how to best furnish and equip their premises in order to suit their particular operational needs.

  • Tax deductions: the cost of leasehold expense can be considered part of a company's operational expenses. As such, these costs may be deducted from a company's taxable profits.

However, some of the aspects mentioned above can also become disadvantages. For example, being bound by a long-term contract may pose a problem if a company needs to downsize, expand, or relocate to another area. Similarly, unfurnished leasehold offices can be expensive to fit out and may require a higher initial investment. Lastly, under a leasehold agreement, the tenant is often responsible for covering the costs of maintenance, property management, and repairs, and this may add significantly to the company's expenses.

For many businesses, especially in the early days when the company is just starting out or expanding to a new area, serviced office space offers a more flexible option with less risk for start-ups and smaller ventures looking to open new office premises.

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