peterinspain

hiyall i have been hearing the word traspaso left right and centre. I hear it is leasehold... But I'm not entirely clear on what happens, I have been offered a lease for 40,000 euros for 5 years with an indefinite renewal but you have to pay rent as well 650 euros a month! Can someone please explain what happens after 5 years? Do you pay 40,000 euros again to renew the lease or is the renewal automatic? And the rent will it be the same or go up?

Eagle

Hi, the article here may clarify your questions:

Leasehold Versus Freehold

You will not have to pay another 40'000 after 5 years. The owner of the property (local) has the right to put up the rent (max. 20%); some use this right, some not.

With the 40'000 you are the owner of the license, the equipment, the furniture, the decoration; the stock (if mentioned in the contract) and other specific installations or renovations made from the seller.

Consider: a) if one day you want to sell the business, you will ask for a leasehold (traspaso); maybe 60'000, depends on your success and the market. b) Make your business plan: within this 5 years you should earn enough to get back these 40'000 with the monthly incoming cash.

At the end it's all about doing well the business! You can't just open the door and wait for people ...

peterinspain

Hi Eagle,

Thanks so much that article was really helpful!

I have been struggling to understand the concept of leasehold up until now. And yes I realize, there will be much more to starting a business than opening the door. I'm hoping to get some more local experience about how business works, before I take the plunge into a business of my own.

ianbayliss1

This really really does not sound very appealing at all to me i cant belive that they charge your a lease then exspect a monthly rent from you too, this has really put me off business in spain i must say its pretty shameful maybe the tax rates are much lower there aka VAT?

Eagle

Let's clarify again the leasehold: The owner of the local is in most cases not the owner of the business, and he is also not the owner of the equipment, furniture, decoration, stock, and especially the license. Logically the owner of the local wants a monthly rent. On the other hand, the owner of the business wants to be paid for the equipment, furniture, decoration, stock, also for renovations he made in the past, and especially the license. Good businesses have a good reputation and a "stock" of clientele. This is a special value for the new tenant - the buyer of the business. Therefore: leasehold makes sense! And don't forget, if one day you want to leave (sell) the business you will ask also a leasehold from a new buyer of your business. Most probably you will want even (much) more than you paid when buying the business (leashold) years ago.

Sundream Estate

Everyone is right, but its depends if you have in the contract that you also have the traspaso right. The owner of the local try often to take the traspaso part out after 5 years when its time for renewal.

greg

This is a very important point Sundream Estate (?), many sneaky owners have taken this right out of rental agreements, forcing tenants to pay them huge sums just to get out of commercial contracts (and be able to sell on their businesses).

Definitely something to look out for if you are buying a business...

On the other hand, in some regions its become so widespread that it has just become norm and there is no way around it other than paying the propietarios a nice little commission.

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Tony Spanish

The crossing is pleased once and only is by the business that you leave mounted, movable, machinery, facilities…. soon another thing is the monthly rent. It studies it well to see if it is profitable since the 650 monthly ones are 40,000 Euros but soon. It studies whichever would cost to you to mount that business being begun new to see if € is less than those 40000. A greeting and pardon by my English (I am Spanish)

GIULIANO-VILLAS.COM

Just a little correction, by law, at least in the Comunidad Valenciana, the owner has the right to get between a 10% and a 15% of the new (traspaso) leasehold, that is the reason that some people want part of the lease in cash and declare in front the owner less money, so he does not get a lot.
In the other hand, once you have finished the leasehold if nobody takes over, you have the right to take all the stok, furniture, etc with you, as you paid for it.
The leasehold is really to sell a business to be taken over, the local will be always rented to the original owner. Business can be also changed to something else if you think the one you are runing is not good enough.

greg

This is the law of urban rental agreements, yes. Then depending on the year it was signed it can be higher or lower...

But fact is one thing is the law, the other reality, and a third thing what you signed in the rental agreement in the first place!

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