Key Factors to Consider When Buying a Commercial Property in England and Wales

Suppose you are a business owner in England and Wales thinking about buying a commercial property for the first time. In that case, you may be wondering what to consider before making the decision. If you have bought a residential property, you may have some idea of the costs involved and implications of house ownership. Still, there is even more to consider before you go ahead and buy commercial property. This article will help you understand the key things you need to think about in relation to commercial property before buying premises for your business.

Is the Property Right for Your Business?

When buying commercial property, the first thing you should consider is whether the property type is right for your business and how you plan to use the property. You will need to think about the location of the premises. Imagine you intend to open a business that will rely on customers coming in to make purchases, like a shop, cinema or restaurant. In that case, you should consider whether: 

• the general area is busy enough to draw customers to you;
• there is a place for them to park; and 
• how good the public transport links are.

If you plan to change the property, you will need to consider how easy it will be to do that. Additionally, if you are planning to change the use of the property, it is essential to note that you may need to apply for planning permission. 

Further, there may be other issues specific to the property you are interested in. For example, a restrictive covenant could apply that prevents you from turning the property into a bar or selling certain kinds of goods.

The Future

Whilst the property you are considering investing in may be suitable for your company right now, another thing to consider is whether it will be in the future. For this, you need to consider your plans for the business and the future prospects of the location of the premises. 

Property values can and do change, and so do customer trends. For example, the recent pandemic has changed peoples attitudes towards shopping and visiting venues for leisure purposes. Similarly, more and more employees want the ability to work from home, which, in turn, may change the amount of office space you need.  

If footfall in a particular area decreases, that may affect how much business a shop gets and what facilities employees have access to, such as places to eat lunch and public transport. There may be a great car park that your clients and employees can use close to your business. However, what if there are plans to redevelop that car park into something else entirely? For this reason, it is vital to be aware of future developments as far as is possible.

Regulatory Issues

As a business property owner, you need to comply with regulatory requirements. If you are purchasing the space to provide a base for your employees to work from, you should be aware that there are requirements relating to:

• how much space employees should have;
• the facilities you must provide; and 
• other health and safety concerns. 

In the current pandemic, businesses have had to adapt their working spaces to accommodate social distancing. Additionally, they have had to take anti-viral cleaning measures so that their staff feel comfortable working from business premises. Therefore, it will be vital for you to consider what regulatory requirements will apply to your business and if the property you are looking at can accommodate these.

Costs Involved in Purchasing Property

Although owning your commercial premises can be more stable than renting a commercial space, it is crucial to consider the finance and tax implications. For example, for property over £150,000, you will be required to pay stamp duty (or land transaction tax in Wales). There will also be the usual costs to pay, including:

• repairs and maintenance costs;
• local authority charges, such as waste management and refuse collection costs; and 
• business rates. 

Key Takeaways

There are numerous factors to consider before purchasing a commercial property. Although there are many benefits to owning your commercial property, there are also downsides. You are tied to the property and responsible for all costs involved in that property. As a result, it is essential to consider:

• what you need the property for and what you want to do with it;
• whether the property and location will suit the needs of your business in the future; 
• what regulatory requirements you will have to meet; and
• the financial implications of buying the property.

If you need help with buying a commercial property, our experienced commercial property and leasing lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.

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