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Buying Commercial Property

I am thinking of buying commercial property for my business but I don’t know where to start?

I am thinking of buying commercial property for my business but I don’t know where to start?

Sometimes the premises you want for your business are not available to rent and you have to actually buy them.  Or it may be that you have money available to invest individually and would like to receive the rent from your business into your own pension fund (see Self-Invested Personal Pensions Funds).  So you make the decision to buy a property for your business.  After all, you have bought your own house so it must be possible to buy a warehouse or an office or shop instead.  How hard can it be?

Everyman Legal has over 60 years’ experience in buying commercial property so know that it can be very hard indeed.  Although buying a house has its own complexities, houses are fairly standardised.  By comparison, an office in a block is very different to a shop in a parade and a warehouse presents different issues to a factory.  There is an argument that you should never buy a property simply for your business to occupy.  Instead, you should only buy it if you want to make a long term investment in that property.  Over time property values may go up but in the short term they can be as volatile as stocks or share but nowhere near as easy to offload where necessary.  Everyman Legal suggests you ask yourself some basic questions before deciding whether or not to proceed with buying commercial property.

And the first question? “Should I be taking a Lease instead?”  You will need to consider both your personal and business-related short term and long term goals, together with your financial position, tax position and retirement plan. And, if you are already leasing commercial property you will also need to check that you can end your lease early or dispose of your lease.

Our Buying Commercial Property section contains lots of information to help guide you through the process, and make buying commercial property a little less stressful. Please see:

Our dedicated team of solicitors, based in Witney, Oxfordshire, would be happy to answer your questions.

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Heads of Terms

If you decide that buying commercial property id the correct way forward for you, then your next task will be to find the property you want to buy.  When you have found one, you will almost inevitably agree to buy it by reference to Heads of Terms.  It is worth remembering that generally such key terms are not legally binding.  Both you and your seller are free to change your mind at any time before you enter into a formal contract. Negotiating Heads of Terms is, however, a key stage in the process as you can consider important issues early enough to be able to walk away if you need to without incurring too much time and expense. Therefore, it is always worth taking legal advice from a solicitor at this early stage.

Investigating the Property

As with buying a house you need to know as much as possible about the property before you commit to purchase it.  We would never advise you proceed without going through a full process of Property Due Diligence and raising full Commercial Searches & Enquiries.  When we have a full picture of the property we will be able to provide you with holistic legal advice so that you know exactly what it is you are buying.

Financial Considerations

Financing such a purchase may not be easy and many buyers find themselves caught between their lender and their own Self Invested Personal Pensions (SIPPs).  Third party lenders will have their own requirements.  They will insist for example that there is a formal lease granted by you/your SIPP to your Company whether or not you particularly think it worthwhile.  If you do not want the whole of the Property, you may want to grant a Lease of part of it to another Company and that means also considering how to manage the Property.

And finally remember all the taxes and similar issues that apply such as VAT, SDLT and Capital Allowances.  VAT may be chargeable at 20% on the purchase price with a further 5% stamp duty land tax calculated on the VAT-inclusive price.  Capital Allowances add an extra degree of complexity.  We do not give detailed tax advice but if you are not yet receiving such advice, we can always help you find someone who can.

For more information on Commercial Property...

Please do not hesitate to contact an Everyman Legal Solicitor on 01993 893620 for a free discussion or email geoffrey.cotterell@everymanlegal.com

The Everyman Legal team acted promptly and with us in mind. We were treated as an important client even though the services for the transaction were fairly routine. They always went the extra mile to keep the process moving efficiently.

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