Buying a commercial property is a bit different to purchasing a residential home. The majority of the commercial sector is made up of:
- Offices
- Retail
- Leisure
- Industrial
Read our step by step guide to help in making your commercial property purchase:
Step 1: Find your property
It pays to do some research into market trends so you can avoid buying at the top of the market when prices are high. You will need to consider points such as the value of commercial properties; the supply and demand; availability of commercial mortgages; tenant demand and rental values.
The location and type of building are also key factors to consider when it comes to deciding which commercial property to buy. You need to consider whether the property is freehold or leasehold and how it will best suit the business needs – be that your’s or your tenants.
Commercial property is divided into use classes under the Town and Country Planning (Uses Classes) Order 1987. The legislation determines how each commercial property is occupied. If you plan to redevelop the building or alter its intended use, you may require planning permission. However, there are exceptions to the rule where legislation allows some changes without full consent. For example, the Government introduced permitted developments rights in 2013, allowing offices to be converted into homes without the need for full planning permission.
Hose Rhodes Dickson’s commercial departments have expert knowledge on all these areas and are on hand to help you make the best decision.
Step 2: Do the maths
Usually a deposit is required when contracts are exchanged and the remainder is then paid when the deal completes. However, there are other costs to consider when it comes to buying commercial property which can include:
- Professional advice, including surveyors and solicitors
- Stamp Duty
- Tax of 2% is paid if the property is valued at more than £150,000 and up to £250,000.
- Above £250,000 stamp duty tax is paid at 5%
- VAT
- Commercial mortgage fees
- Refurbishing and/or decorating costs
- Fittings
- Business rates
- Energy costs
- Ongoing maintenance
Step 3: Secure your business loan
You might require a loan in order to purchase the property and a commercial mortgage is the most common force of finance. Commercial mortgages typically range from three to 25 years. You may want to seek professional help from a commercial mortgage broker.
Step 4: Put in an offer
When you have found the right property for you, put an offer in. Once this has been accepted, you might want to ask that the property is no longer advertised. Your solicitor should carry out a local authority search to unearth anything that might impact the commercial property and the wider area. The search should include details of any relevant planning applications, building regulations, transport development and other issues, such as contaminated land.
Step 5: Exchange and complete
Your solicitor should now draw up a document detailing the main points of the sale. It is called the heads of terms. This document will include the type of agreement struck, how the deal will be financed and any proposed timescales. A survey of the commercial property will typically be carried out to make sure it is structurally sound and there are no major flaws that have not been accounted for.
Once the formal documents are signed, dated and delivered, you have completed. Your solicitor will then hand over the remainder of the purchase price to the seller’s solicitor, and you will receive the keys to your new commercial property!
To see how we can help with your commercial purchase or if you have a commercial property to sell, get in touch with our commercial department on 01983 527727 or
commercial@hrdiw.co.uk
