Types of Expenses When Renting an Office
Surely you have heard about the variety of fees you have to pay if you decide to rent an office. But in fact, when renting have to pay all those Expenses? NO!
1. Fixed cost in office Expenses:
- Office rental
- Service fee (management fee): This is the amount the tenant pays for the services and utilities of the building, including reception, security, sanitation, water in the WC area, lighting, and air conditioning. join public areas, operate elevators, kill insects, take care of trees, etc.
Regular service charges do not include Electricity charges in the rental area, parking fees for cars and motorbikes.
2. Variable cost, according to actual use:
- Air-conditioning charge: Air-conditioning charge is included in the service charge for Grade A and Grade B buildings. Usually not included in the service charge for Grade C buildings. Statistics are based on reality. If you have to pay for electricity for an air conditioner according to the meter, the average cost is 1-1.5 USD / m2 / month depending on the time used, the type of air conditioner, the new old of the air conditioner.
- Electricity consumption in the office
- Parking fees for motorbikes
3. Unusual expenses:
Overtime fee/Expenses: This is the amount the tenant pays for the building owner’s expenses such as electricity for the elevator, electricity in public areas, water for WC, overtime wages of employees. operation etc. and the largest amount is the electricity bill for the central air conditioning system. When working overtime, if you do not use central air conditioning, there are collection buildings, some buildings at no charge.
There are 3 ways to calculate overtime fees:
- Calculated by office: For example 300,000 VND / office/hour
- Calculated by the rented area: For example 0.02 USD / m2 / hour * Rented area
- Calculated by equipment: For example 10 USD / unit/hour, normally a unit (FCU – Fan Coil Unit) for the cooling area of 40-70 m2 depending on the type of equipment.
For businesses who often work overtime, can negotiate a reasonable cost package. Or install a local air conditioner (if technical conditions permit) to reduce overtime costs.
4. One-time fee for the entire rental period:
- Service fee during the construction of the interior: During the construction of the office furniture, the building owners will be free of rent, but still collect the service fee: Grade A, B buildings are negotiable at 3 – 5 USD / m2 / month; Grade C buildings charge at a rate of around 1 USD / 2m / month, some buildings only collect actual electricity consumption according to the meter.
- Site return cost: Office lease contracts have the following provisions: Upon termination of the contract, the tenant bears the cost of returning the site as received from the building owner minus reasonable depreciation. Includes the costs of demolition, cleaning of all built and installed partitions, interior decoration items.
5. Provisions in the contract affecting the cost of office rental:
- Determination of payable areas: Grade A, B, C professional office buildings only charge rent for the actual areas that customers use. There are three methods of measuring area as follows: Clearance measurement, inside the office; Measure the heart of walls and walls surrounding the office; Measure along the outer edge of the wall and the wall that surrounds the office.
Usually, the column in the rented area is still added to the pay area. In some buildings when the column area is too large, consider deducting part of the whole area
- The effect of exchange rate adjustment on the rent at each payment period: Most of the professional-grade A, B, C office buildings in Hanoi are quoted in USD. In compliance with the State Bank’s regulations, the rental and service fees are converted to VND to sign the Contract.
Some buildings have terms to adjust the rent and service charge at each payment period (03 months) according to the actual exchange rate at the time of payment. Some buildings do not have this regulation, but the rent in VND is fixed during the term of the Contract. In the past 10 years, the exchange rate USD / VND increased year on year low, but on average is 4% per year.
- Adjusting the rental unit price: With a 3-year office lease contract, the building owner usually stipulates that the office rental price will be adjusted after 2 years, increasing or decreasing depending on the volatility of the market. . But in reality, this rule is rarely implemented, it is difficult for the owner of the building to raise prices with customers because it affects all tenants in the building. And the more difficult it is for the customer to demonstrate a reduced market price level to request a discount.
For Foreign companies that want to start or expand businesses and look for an office in Vietnam:
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