INSIGHT: Being savvy when buying a commercial property

Posted on August 30, 2016

Are you thinking of buying a property to house your business?

Read our checklist below to find out how to take a savvy approach to searching for and buying the best premises for your business needs.

What to look for searching for suitable property

All investments carry risk. Business should be absolutely clear about what they want to achieve when buying a commercial property before they even start to search for a suitable premises. Consider the following issues before you take this big step.
Why are you moving to new premises?
There are many financial benefits but be aware of the disadvantages too. Considering the issues in the table below will help you to decide whether it is better for you to buy or rent a premises. If in doubt, seek financial advice.

Benefits	Disadvantages
More control over your physical surroundings (from décor to structural changes).	You are responsible for maintaining the infrastructure of the building.
More control over your outgoings – monthly payments on a commercial mortgage can be fixed whereas when renting, a tenant can expect regular rental increases.	It is less easy to change the building to adapt to changed business circumstances.
There are tax benefits to be gained on commercial mortgages (such as interest payments being tax deductible).	A property purchase can affect cash flow. Buying a property is expensive and uses cash that could be spent on other business needs, such as stock, training or employees.
There can be increased flexibility to sub let some of the property if needs be, say if your need for space reduces.	A large deposit will be payable in advance to secure the property.
The property could increase its value. There is also the potential to amass capital against which future finance can be secured.	It may be difficult to sub let your premises. If you can't find tenants, you must still bear the costs of the full premises.
	The property might decrease in value that would affect the total capital in your business.
	Property is a significant asset that incurs costs – whatever the market.

The location of the property can be crucial

Where are your employees? Can they commute easily to work?
Do you need to be near transport links?
Are you in retail? Where are your customers?
If you needed to downsize your business, how easy would it be to resell the property or sub-let parts of the property? What kind of area is located within? Is it sought after?

Think also about the type of premises your business needs.

What size is right for your business?
What does your business do? What will it be doing in the premises? Does the premises have planning permission that covers what your business does? If not, how easy will it be to obtain that planning permission?
Where will your staff work? How much space do you need per employee? Will they work in open plan or offices?
Do you need parking space? For your customers? For your staff?
Will you welcome customers into your premises? Where will you host them? What meeting space do you need?
What storage space will you need?
The age of the building might be more or less important depending on your business. Check whether the facilities and services meet your needs. For example, the interior of an old building might be too dark or need structural work to make the rooms suitable for work. An old building might also be listed which would make building changes difficult (or impossible).
Get a building survey done - ensure you know in advance the state of the building so that you don’t face unexpected repair costs when you move in.

How will you fund the purchase?

Do you have the deposit saved?
If you need to borrow money, do you have an offer from the bank?
If the loan is from a non-banking third party, how will you arrange the repayments? What contract will you enter into regarding that loan?
Have you done the basic maths? Can you afford to buy and maintain the premises? What about the moving costs and fitting out the new premises for when you arrive – as well as the changes you will have to make to your business stationery. What about costs such as services, fuel, insurance and council tax?

The legal position

Buying a commercial property is a huge investment that can affect the running of the business. Our commercial team can help you to decide whether it is the right move for you and your business. They can also help you with the purchase procedure.

Contact

To find out more about how we can help, call us on 0161 785 3500 Make an enquirymake an online enquiry.

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Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.