LEASE CASE STUDY - Large Law Firm

THE CLIENT
A large international commercial law firm, located in the South East with four offices, over 20 partners and over 20 other employed lawyers.

THE PROJECT
Their Central London office needed to relocate due to the lease on their building expiring. They chose to move to a prestigious 7,500 sq ft open plan office requiring general fit out works including:-

Space planning and design
New Office Furniture
Partitioning and Decorating
Specialist Joinery
Air Conditioning
Toilets and showers
Power Supplies and Electrics
Lighting
Flooring
Voice and Data System

Value : £430,000 + VAT
Contract Period : 8 weeks
Project Date : Q4 2004

THE FINANCE PACKAGE
The fit out contractor required fortnightly staged payment authorised by the client's Quantity Surveyor in line with a standard JCT contract. Plus Finance arranged a Pre Lease Agreement which allowed the contractor to be paid on request, although the four year Lease Rental Agreement didn't commence until the contract had been completed.

The Plus Lease Rental Agreement was chosen because it gave the client the following benefits:-

Rentals 100% allowable against taxable profits.
All elements of the fit out could be included.
No issues regarding which parts of the fit out qualify for capital allowances.
By using our cash verses lease analysis, Plus Finance estimated the client saved over 14% by using leasing rather than paying cash. This assumed a 40% client tax rate, 70% of the project qualifying for capital allowances and a 5% return if the cash was invested elsewhere.