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Buyer's Guide
Buying a business or commercial property can be quite daunting at times. Maybe you are considering starting your own business and becoming self-employed or are expanding an already successful enterprise. Possibly the premises will include owner’s accommodation in which case, not only a new business is involved but also a new home. Read our guide to what you need to know about the buying process.
Step 1: Financial Considerations
These are particularly important in commercial transactions as you need to know not only how much you can afford but also that after running costs there will be enough profit to give you a living.
If you are buying a premises which involves an up and running business such as a trading retail unit, hotel, guest house, café, restaurant, public house etc, it is important to take into consideration any financial information available including accounts and trading figures. These should be made available to you, usually once a viewing of the property/business has taken place.
It is important to understand what you can afford, particularly as deposits needed for commercial premises are considerably higher than those required by the domestic market. Legal costs and possible stamp duty charges need to be factored in.
If you require a lending decision you will need to contact your bank or consult with a financial services professional who has access to commercial lenders.
Step 2: Search for your requirements
Once you have decided what your business/commercial needs are, you can start searching for what you require.
Register with agents in your area – they may know about properties that are coming to market soon but not yet advertised and will be able to discuss your requirements in detail. Keep an eye on commercial websites in the area, many commercial properties are also listed on Rightmove. Websites such as Daltons Business are also useful when conducting a search.
Step 3: Make an offer
Once you have found the right property/business, it is time to make an offer, which is usually through the estate agent marketing the property (you only pay an estate agent if you are selling, not buying). Take into account the financial considerations and anything that may need to be done to the property to make it suitable for your needs. Also research any other similar transactions that may have taken place in the area.
Step 4: Offer accepted
Once this has happened it is time to make sure you have a solicitor ready to perform the legal work of purchasing the property/business. It is important that you engage a legal professional who deals with commercial property.
At this point you will be required to provide information for Anti Money Laundering, this being a requirement by HMRC. Information required will
include proof of identity, address and funding for the purchase.
Step 5: Valuation takes place
If you are borrowing money for the purchase, your lender (mortgage provider) will require a valuation on the property to check the price being paid. This is a valuation not a survey and won’t identify all the repairs or maintenance that might be needed. If you want a more in depth report on the condition of the property you will need to engage a suitably qualified property surveyor. There are various inspections and reports that are suitable for commercial premises.
Once you have the results from the survey/valuation, you might wish to go back and negotiate the offer price, based on the findings. Your agent will be able to assist with this.
Step 6: Check your paperwork
Now you will need to get your lending requirements (mortgage) finalised, ask your advisor to contact your lender to proceed and obtain your mortgage offer.
Your solicitor will now carry out the searches on the property, some are optional and some your lender will insist on, but expect to have drainage, local authority and environmental searches carried out. Now is also the time to arrange your buildings insurance. Even though you don’t officially own the property yet, once you’ve exchanged contracts you’re legally-bound to purchase it, so it’s a good idea to have this ready to put in place.
Step 7: Exchange contracts
If there are no problems or delays with the solicitors, you will now receive a contract to sign and complete the sale. Check the contract carefully before signing. Once you are happy with it, your solicitor will pass it on to the solicitors of the party you are purchasing from. Your deposit fund is then passed along too. This is the exchange of contracts and you are now legally-bound to purchase the property.
Step 8: Final steps & completion
The remaining money owed (including your mortgage funds) is now transferred from your solicitor’s account to the seller’s solicitor’s account. The
property is officially yours – you can collect the keys once confirmation has been received from the seller’s solicitor.
Your solicitor will register the sale with the Land Registry, and send the new title deeds to your lender (or you if you are purchasing without a mortgage). You will need to pay all your costs, including Stamp Duty and your solicitor’s bill, which has normally been prepared in a completion statement.
