Commercial Buying & Selling

The location of the commercial building is crucial. Consider factors like accessibility, visibility, proximity to target customers, suppliers, and transportation links. A prime location can have a significant impact on the success of your business.

Determine the type of commercial property that best suits your business needs. Options include office buildings, retail spaces, warehouses, industrial properties, or mixed-use buildings. Select a property that aligns with your business requirements and growth plans.

If you buy the freehold of the property, you are essentially buying both the building and the land it stands on. If you buy the leasehold of a property, you are buying the right to occupy the property for a fixed period of time. You will be entering into a lease with the freeholder and your rights and responsibilities will be defined by the terms of that lease.

Conduct a thorough inspection of the commercial building to assess its condition. Look for structural issues, safety concerns, and any potential repairs or upgrades needed. A building inspection can help you avoid unforeseen expenses in the future.

Finance Costs: Calculate the monthly loan repayments and assess your ability to refinance if necessary. Being prudent in managing debt is essential to avoid financial strain on your business.

Tax: Depending on the property type and location, you may incur Stamp Duty Land Tax and this can add considerably to the overall cost, so it’s crucial to account for it.

VAT: Generally, commercial property sales or leases are exempt from VAT. However, there are exceptions, so it’s essential to verify the VAT status of the property.

Refurbishment Costs: Budget for refurbishment expenses if the property requires modifications to meet your business needs. For leasehold properties, you may need a separate agreement with the freeholder for changes, which can incur additional costs.

Insurance: Obtain suitable insurance coverage to protect your investment and satisfy the requirements of commercial property lenders. Insurance is often a condition in commercial leases as well.

Service Charges and Leasehold Costs: If the property is leasehold, you’ll likely have to pay ground rent, service charges, and other expenses related to maintenance and communal areas. These costs can impact your overall budget and profitability.

Legal and Professional Fees: Factor in the costs of hiring legal professionals, surveyors, and other experts to assist with due diligence and property transactions.

Business Rates: Consider the potential business rates you’ll need to pay on the property. These rates are determined by the property’s value and can be a significant ongoing cost.

Utilities and Operational Expenses: Estimate utility costs, ongoing maintenance, and operational expenses necessary for running your business on the property.

Contingency Fund: It’s wise to set aside a contingency fund to handle unexpected costs and emergencies that may arise during the ownership of the commercial property.

Being thorough in your financial planning and accounting for all these costs will ensure you make a well-informed decision and set yourself up for a successful and sustainable investment in commercial property.

Setting up a limited company to buy commercial property offers advantages as an investment. Profits are liable for Corporation Tax instead of income tax, reducing the tax burden and making the investment more profitable. However, transferring an existing property to a company may incur Capital Gains Tax and Stamp Duty Land Tax.  You should seek advice from tax professionals before making decisions, as each situation is unique.