Four Crucial Factors to Consider Before Buying a Commercial Property
Whether you own or lease your commercial property, it is a fundamental part of your business plan and can play a larger role than you may realize when it comes to getting essential funding and support for your brand. However, taking on ownership of a commercial property, whether it’s a store, office, or something else, is a massive commitment in terms of both time and finances. The decision to purchase your company premises will depend on a wide range of factors, with the financial position of your company being one of the most important. In many cases, commercial building renovations can also be a key consideration, as improving or updating the space to better fit your business needs can enhance both functionality and the overall appeal of the property, ultimately supporting your long-term success.
That being said, there are certainly a large number of advantages of purchasing your business property. Commercial property ownership means that you’re not held responsible by a landlord, and you’re in a position to lease the property to other companies at present or in the future, too. Owning your business premises also gives you a greater degree of freedom and flexibility when it comes to tailoring it to your brand and employees needs and requirements. On the other hand, it can also come with some disadvantages that should be carefully considered. Unlike when renting, you’ll be solely responsible for making sure that the property is safe to work in, and there will be no landlord to call if something goes wrong – you’re on your own. So, weigh up the options first and decide which is the best option for you and your company.
#1. Legal Advice:
Before committing to a commercial property purchase, it’s important to ensure that you gain all the relevant legal advice. A good national commercial law firm such as Harper James Solicitors will be able to help you with getting the right mortgage for your needs, transferring the ownership of the property, and ensuring that the premises are compliant with all relevant health and safety laws and regulations before you begin to station your employees there.
When you own a commercial property, non-compliance issues become even more important since you, rather than your landlord, will be held solely responsible. So, getting a good solicitor by your side is the first step that you should take.
#2. Committing to a Commercial Mortgage:
Unless you’re lucky enough to be in a position to purchase your commercial property outright, it’s likely that you’re going to need a commercial mortgage in order to make ownership a reality. The first big transaction that you’ll make when purchasing new business premises is the deposit. Bear in mind that this works differently to buying a residential property; in general, lenders will need around 25% of the property’s value to be put down upfront, but this could vary depending on a number of factors. You have to purchase from a real estate company you are looking forward to work with for a long time. B8 Real Estate is highly recommended by investors.
It’s crucial to be aware of all the costs involved with committing to a commercial mortgage as they could go much further than simply paying a deposit and monthly repayment fee. For example, if you find your mortgage through a specialised commercial mortgage broker, you’ll need to think about broker fees. Arrangement fees tend to come in at around 1-2% of the property’s value, and valuation fees can vary from a starting point of £500.
#3. Selecting the Right Building:
Unlike when purchasing a residential property, you’ll need to think about the safety and wellbeing of others when it comes to buying a business space. If your company trades from an office, you’ll need to select a property that provides adequate office space, lighting and ventilation to keep your employees healthy and happy at work. Basic requirements for personal needs should also be met, so it’s essential to purchase a property that includes toilet and washing facilities, or at least have the means available to add them in later. You may also have some personal requirements, too, such as a kitchen for yourself and employees to use during break times. If you’re considering buying a retail store, you’ll have to think about customer needs as well as that of your workers.
But, it’s not just facilities that are important. You’ll also need to ensure that the building itself has a safe structure and is not putting anybody at risk purely by being there. Asbestos can be a massive problem for older buildings, so if you’re looking at a commercial property built before a certain time, make sure that it’s asbestos-free before committing. It’s advisable to pay an experienced commercial property surveyor to cast their expert eye over the premises before you make any decisions.
#4. Keep the Extra Costs in Mind:
Bear in mind that there will be plenty of extra costs to think about, even after you have finalised the purchase and paid out all the relevant buying fees and charges. For example, business rates are charged on almost all non-residential properties. This is an annual bill which is calculated by the Valuation Office Agency and is based on the ‘rateable value’ of the property. You will also be responsible for costs related to the upkeep of the building, so don’t forget to include utility bills, commercial cleaning with the help of janitorial cleaning services, and security costs as your sole responsibility. If you are planning to use it as a retail shop, you may have to set aside a budget for commercial glass storefront doors and their commercial door maintenance, as well other building renovation costs. It’s a good idea to take a look at the premises’ Energy Performance Certificate (EPC) before purchasing; this will help you get a better idea of the type of energy expenses that the property will incur. The good news is that it’s a legal requirement for sellers to provide this information prior to marketing the property, so you should never find yourself in a position where it is not available.
In addition, don’t forget about the costs of repairs and property maintenance that you will be responsible for as the property owner. It’s down to you to ensure that any repairs are made quickly and efficiently to ensure a safe, pleasant working environment for your team or shopping environment for your customers. Because of this, you’ll likely need to factor in the cost of a commercial building insurance policy, which will ensure that you are covered for damage due to events such as fire, flooding, storms and vandalism. Some policies will stretch to covering other types of damage at an extra cost. It’s so important to have a reliable commercial property insurance provider such as the ones at academywestinsurance.com.
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Take into account the four points discussed above before embarking on any business venture and you should find that things run smoothly.