If you’ve developed your business to the point where you need a physical premises, it can be a very exciting time. Generally, small business owners will choose to rent their first commercial property, but there are certain circumstances where you’ll want to buy instead. While buying can give you more flexibility and freedom in some areas, it’s important to consider various legal and financial aspects. Here’s some valuable pieces of advice to bear in mind…
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Buying Pros and Cons
Buying a commercial property will give you the freedom to use it and alter it however you like, as long as you stay within planning regulations and any specific conditions imposed by the bank in question. When you buy a commercial property, you’ll have much more flexibility over managing and maintaining the building, more certainty when you’re forecasting your costs, and may be able to profit from selling the property if it gains value in the time you own it. On the other hand, it can tie up a big chunk of your capital, which could be used to invest in your business and grow your operations. It can represent a lot of downtime if you need to make major alterations and manage construction work. You’ll also be tied down to ongoing costs, which brings us to the next point…
The Costs of Buying and Operating
There are various upfront costs you’ll need to cover when you come to buy a commercial premises, such as VAT and Stamp Duty Land Tax, fees for making searches, checks and enquiries with the local authority, and solicitor’s fees to ensure the whole exchange goes smoothly. You may also have to budget for some major alterations and additions just to make sure you stay within the law. You can find out more about this kind of alteration with a guide to fixed wire testing. Aside from these initial expenses, there are going to be various ongoing costs that you need to cover. You’ll need to insure your property against a number of risks, keep up with mortgage payments, and pay for local authority charges like parking and waste collection. This is all before the standard running costs of electricity, broadband and so on. When you calculate all you’ll have to pay, renting your business premises can seem like a much more appealing option.
Making an Offer
If you do all your forecasting and decide that buying is right for you, then find a property that checks all your boxes, the next step is going to be making a conditional offer to the real estate agent. This means telling them that you want to buy the property for a particular price, provided that certain conditions can be met. This will typically include a satisfactory property survey, you being able to come up with the finances, and being granted planning permission for any kind of alterations and additional construction you want to carry out. If the vendor you’re liaising with is happy with the price you offer, then it will be accepted. If not, you’ll need to negotiate further.