I am sure many would have heard of this and I would imagine it is similar in other parts of the country.
When someone decides to try a hand at setting up a shop or a restaurant (I think this applies to other businesses) one must start by finding a suitable site to set it up. With new buildings and new site it’s really very simple; find the site, discuss with the landlord (owner of the building) and complete lease agreements. It becomes a little more interesting with already occupied spaces. A new would-be occupant of the space has to buy the shop space from the current occupant and interestingly the landlord normally is not involved in the process. The amount charged in therefore, shopping for a space is not only the allowable security deposits and rent which get reflected in the personal income tax but an extra layer with no transparency nor the need to add on the total cost of starting a small business. Although in some instances shop spaces would go to the next occupant with costs of goods in the shops (as a result of negotiation) but it has been abused more often than not. It has become a norm to have to pay for simply letting the space to the in-coming occupant by the occupant and not engaging with the landlord.
Part of the problem may also lie in the ignorance of landlords in understanding implications of leasing out to tenants who in turn may sublease (which may sometimes be covered well under terms of contract) but more often that not, it may not be the case.
While this is clearly a disadvantage for “wanna-be entrepreneurs” where we would like to see more and more self-employment, I feel it is also a ridiculous market development that responsible agencies should take a look at. This clearly is not helping start-ups by shooting their set-up costs higher than the real costs and further does not add any value either. Clearly encouraging speculative hording of spaces to eventually extract profit out of the purview of rules and regulations.