Buying commercial property is a big decision, particularly in testing economic times, but it can offer substantial rewards – especially if the property appreciates in value.
It may be seen as the territory of big investors and businesses, but for those with more modest means, properties like shops and showrooms can be affordable and profitable.
Before deciding to buy, research needs to be undertaken on the viability of the location, and overall costs, including professional fees and local business rates, as mistakes can prove costly.
When buying factors to be considered include:
- Freehold vs leasehold: Due diligence is essential on all property purchases, but it is very important on a leasehold purchase as it can reveal potential issues such as any restrictions on use and obligations.
- Tenants: When buying a property if it is already tenanted it may be easier to secure lending, but be aware that the property may remain vacant for long periods.
- Deal Structure: The type of purchase required and the deal negotiated around it can create additional complications. Whether you are buying from a broker, at auction or purchasing property that is yet to be built in a forward-funding deal, it is best to seek legal advice.
- Capital Gains Tax: While the value of the property will appreciate, you will pay a proportionally higher amount of Capital Gains Tax on your disposal
- Costlier loans: The loan costs for commercial property are usually higher than for residential property
- Stamp Duty: The nil-rate band for commercial property is £150,000, and above that, you will have to pay stamp duty on increasing portions of the purchase price
- Building maintenance: The maintenance or renovation of commercial premises can be substantial
For help and advice on matters relating to the commercial and residential property sector, contact Gunduz Misiri on gunduz.misiri@mackrell.com or at 020 7240 0521.
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Gunduz has been a qualified solicitor since 2011 and specialises in both Residential and Commercial Property. He acts on behalf of Buyers, Sellers, Landlords and Tenants in the acquisition and disposal of both Commercial and Residential Property.
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