Buying Commercial Property – What you need to know

The realm of commercial property in the UK is a sector that encompasses a wide range of properties used for business purposes, including office buildings, retail spaces, warehouses, and industrial sites.

If you are considering purchasing a commercial property, this article aims to provide some understanding of what to be aware of and an insight into the most common questions our experts get asked.

Purchasing a commercial property is a large investment and commitment that can often be a complicated process. Whether you are buying for the first time or you are looking to invest in larger business premises, there are a few things you should consider:

• Have you run the numbers? It is important to ascertain how this purchase will benefit your business in terms of profitability and how it will impact your cash flow. Is your business in a suitable financial position to buy a commercial property?
• Does it meet your business needs? Is there enough space for your existing team? Will the premises allow for expansion should your business and workforce grow?
• Have you considered whether the location is suitable for your employees, suppliers, and customers to get to?
• Have you done your research? Like any property purchase, you need to make sure you find out as much about the property as possible, to avoid any unpleasant surprises.
• Who will help you with the transaction? It is highly recommended that you consult your accountants, brokers and solicitors before proceeding with a transaction to ensure everything is in order, both legally and financially.

Backhouse Solicitors have a wealth of experience in commercial conveyancing and our experts are able to advise and assist with your purchase of a commercial property.

Investing in commercial property involves navigating a complex legal landscape. This includes understanding the regulatory framework governing property transactions, leases, and planning permissions. Investors must be aware of their legal obligations, including those related to health and safety, building regulations, and environmental legislation. It’s advisable to seek expert legal advice to ensure compliance and to protect investment interests.

A commercial mortgage works similarly to a residential mortgage, but they tend to come with a higher rate of interest because the property purchase is deemed a higher risk. As with a residential mortgage, there will be monthly repayments, so it’s important to review the financials of the business to determine affordability.

In addition, there may be other fees that will need to be paid as part of the mortgage such as arrangement fees, brokers fees, valuation fees and legal costs. When taking out a commercial property loan, you should consult a broker who specialises in commercial property. As experts they will be able to advise you on how to achieve the best outcome for you and your business.

There is no stamp duty to pay on a commercial property valued under £150,000.  Stamp duty is payable on any commercial properties exceeding £150,000. To find out how much stamp duty you are likely to pay, visit: Stamp Duty Land Tax: Rates for non-residential and mixed land and property – GOV.UK (www.gov.uk)

Buying a commercial property is a big investment and could have other cost implications should anything go wrong. Having a commercial property insurance policy in place will help protect your business from costly payouts such as damage caused from burst pipes, flooding, a fire, subsidence and more.

You should also consider taking out business contents insurance that, similarly to home contents insurance, will cover the costs of anything inside the building such as computers, machinery, and stock, that the business owns.

Buildings insurance and contents insurance policies can be taken out separately or together under one policy and both options can be tailored to your business needs. With any insurance it’s important that you understand what each policy covers and doesn’t cover, to ensure you have the most appropriate protection in place and no nasty surprises down the line!

We have an extremely knowledgeable Commercial Property team who can help with your commercial conveyancing, a lease agreement, a lease extension and other services. We believe in delivering an excellent service to our clients. To speak to one of our experts, contact us today.

Tel:          01245 893400
Email:     info@backhouse-solicitors.co.uk
Visit:       17 Duke Street, Chelmsford, CM1 1JU
Or send us a message through the Contact Us page on this website.