Are you looking to buy a commercial property? Doing so is certainly an exciting move for a business, be they large or small, to take. Acquiring new premises - whether its a retail outlet, office or hotel - provides a great chance to generate additional revenue for an organisation, but it is a substantial financial commitment that should not be overestimated.
As obvious as it probably sounds, purchasing a property - regardless of its size - is not something that ought to be done lightly. Indeed, as youll be shelling out several thousand pounds for the development, you really need to make certain that youre both buying something that is right for your particular requirements and getting the most bang for your buck. If you fail to do so, you may be stuck in a deal that is not right for your specific needs and proves to be prohibitively expensive.
Of course, this is something that youll be keen to avoid, so it is imperative that you do not rush ahead in buying a property and instead spend some time considering the various costs and charges you will be liable to pay. There a wide range of expenses that are attached to purchasing commercial developments, so ensuring youre aware in advance of everything you will need to pay for should mean that you dont end up spending beyond your businesss means.
Here is an insight into some of the main costs you should be aware of.
The property itself
This is probably something that should go without saying, but the main cost involved with buying a property is the value of the property itself. Obvious, youll be keen to pay a fair price, so its worth spending a little time seeing how much money similar developments have sold for in recent months.
Online property portals like Rightmove and Zoopla are often good places to find this information out and can help you to establish if the vendor for the outlet youre hoping to acquire is demanding a fair price.
Unless your business has significant cash resources to call upon, youre likely to have to fund the purchase of a commercial property through a mortgage. However, its important to bear in mind that these products have a variety of costs attached to them.
Although its easy to concentrate solely on the headline rate of interest charged on your mortgage - it is this, after all, that have will the greatest influence over your monthly payments - there are several other charges you will need to consider.
These include legal bills, arrangement fees - which can often be worth 1.5 per cent of the loans total value - and an early repayment penalty, which may be applied in the event you complete your payments ahead of schedule. Depending on the lender you borrow from and the product you take out, some of these costs could be incorporated into your monthly payments, while others are charged separately.
Away from the mortgage attached to a property, stamp duty land tax is perhaps one of the most important expenses that you will have to take into consideration. This is a levy that applies to all UK developments, though its worth bearing in mind that different rates are charged for commercial properties compared to their residential counterparts.
The value of the property you are hoping to buy plays a significant role in how much stamp duty you are liable to pay once the transaction goes ahead, so its worth checking what the thresholds on the levy are in advance before you make an offer.
However, there are some cases where you might be able to reduce the amount of money you pay. If this is something you are interested in pursuing, its worth getting in touch with a specialist expert tax service for assistance.
If you have purchased a commercial development, please share your experiences of the buying process by leaving a comment below.