Over the last few decades there have been many changes to the world of work including the rapid increase in migration to the UK and the growing number of women...
Buying a Commercial Property – Stage 2: Knowing the Market
This blog is the second in a series we are running around “Buying a Commercial Property”. This article will cover what you need to think about before proceeding, and some aspects you will need to think about in the next steps of the process.
You can find the other instalments here:
At this stage you probably already have an idea about what size property you need, where your ideal location would be and what you want to gain from having the property. So to move things on, the next step would be to get in touch with local estate agents.
It would certainly be worthwhile having a chat with a few local agents. Ideally those with an established contact database and good knowledge of the area. Ask that they keep a record of your details and that they get in touch if they become aware of any new properties that come on the market and even those that may be available shortly.
In order to sort the wheat from the chaff in terms of your ideal property, your agent will need to know what you are looking for. Let them know what it is to be used for, and what size property would suit your needs. An idea of location would also be good too, especially as some agents cover larger geographical areas, or have multiple offices from which they work.
Whilst you have an eye on the ground, you should also be thinking through the numbers and making sure that having premises will not cause a black hole in the budget of the business.
Premises can be costly. Not only will you need to pay the purchase price when you complete, but you may also need to pay Stamp Duty Land Tax (abbreviated to SDLT), search fees and legal costs. After completion, you will also need to consider business rates, utility costs and maybe even service charges. Under estimating any of these costs may have an adverse effect on your business.
As part of this ‘knowledge’ step, make sure you compile your figures and speak to your bank manager, accountant and other business advisers to see what recommendations they are able to make, and to ensure that you are aware of any support they are able to offer.
Like individuals, some businesses may be able to acquire premises by way of a cash purchase, whilst others will need to obtain bank funding. At WSP, our commercial property solicitors are able to help whether you have the funds available, or if a mortgage is needed. We frequently liaise with banks and mortgage companies and we have good contacts with the local bank managers. Speak to your local bank manager to see how they can assist. It may be that you will need to contact a mortgage broker to guide you through the packages available in the mortgage market.
Tax and Accounts
Due to different tax systems, we would recommend that you speak to your accountant to obtain advice on whether a property should be purchased in the name of an individual or a company. If an incorporation of a new company is recommended, our colleagues in the Company Commercial department would be able to assist.
Forward planning at the start of a transaction may have financial savings later on down the road.
The next blog in this series will be looking at “Buying v Renting? And More thoughts on Financing ”.
As all commercial property transactions vary, our commercial property team offer a bespoke service and we are happy to help. Please reach out to our Commercial Property team and we can make your life less complicated. You can get in touch here or in the sidebar of this page. Alternatively you can call us on 01453 847200.
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