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Business Premises

As your business grows, you may find you need premises from which to run your company. Whether you buy or lease will depend upon factors such as budget, location and business objectives. Either way, it is a large investment and you should seek early legal advice to get the most out of your property transaction.

Buy Or Lease?

The first thing you must decide when looking for business premises is whether you want to buy or lease. This choice will probably hang upon the nature of your business, and how you foresee it developing.

Buying and leasing each have many different advantages. We will look at the pros and cons of both, helping you decide which is best for you:-

Lease

If you predict your business is going to grow at a rapid rate, then leasing may be the best option. This is because it offers a certain flexibility, allowing you to easily relocate should you outgrow the premises you are occupying. Furthermore, leasing means you have less capital tied up in a mortgage, freeing up more cash to inject back into your business.

However, as a tenant you do not have the freedom to make changes to the property. If you wish to do so, you must seek permission through the landlord.

Buy

On the other hand, being the owner of a commercial property means you can alter the space to meet you company’s requirements. Additionally, buying your own premises for business will allow you to:-

• Lease to other businesses, increasing your revenue;
• Gain from future appreciation;
• Avoid increasing occupation costs and rental rates.

However, investing in premises for your business is a big commitment. Not only will your money be bound to the property, you will also be subject to all the fluctuations of the property market. This could have a negative impact on you finances in the future, while in the short-term you will have more bills to pay.

Mortgages On Commercial Property

If you do decide to buy, you will probably need to obtain a commercial mortgage. This is often more costly than residential mortgages, as a much larger deposit is needed. This will differ depending on the property and the mortgage lender, but generally a commercial mortgage is likely to cover around 70-75% of the value of the property.

You must remember that there are many other costs that will be incurred when buying a commercial property, such as interest payments and capital payments. A conveyancing solicitor will be able to advise you on the additional expenses that must be considered, enabling you to make an informed assessment of your budget.

Summary

If you would like any information or you need some assistance with a commercial property transaction, then a conveyancing solicitor will be able to help. Buying and selling commercial property is very different to that of residential property, so it is wise to seek legal advice before proceeding.

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