Buying Commercial Property
When buying commercial property there is a lot to consider and you should always do your due diligence before making a purchase. Seek professional advice and take the appropriate steps to ensure you are protecting your investment.
Below we will go through a brief guide to buying a commercial property with what to be aware of before making the purchase.
Know What You Want
This may sound obvious, but you need to know what you want to use the building for that you are purchasing. Certain buildings will suit certain needs, but more than that, some buildings will have restrictions on what they can be used for. So having a clear plan of what you are going to do with the property before buying is essential. Far too many investors see a ‘bargain’ and buy then try to figure out what to do with it which often leads to money being lost.
Does This Commercial Property Suit Your Needs?
Having established that you should have a clear idea about what you want to do with the property, there are some factors to consider when setting up for business.
- Will you need to expand at any point, if so, does this property allow for that?
- Does this property allow you to conduct the business you want to?
- Are there good transport links?
- Is there parking?
- Is there a proven track record for this area in your chosen business?
- Can you sublet?
- Do you need walk-by traffic? Does this area have that?
- Does this property provide the flexibility you require?
Stick to Your Budget
You need to set realistic budgets in place and stick to them. There can be a lot of hidden costs that cause miscalculation and mean you end up having to borrow more than anticipated. Make sure you include all fees, such as Stamp Land Duty Tax and professional fees. Allow for refurbishments and construction costs in your budget and maintenance and operational costs. Don’t forget the services such as waste management and your mortgage costs.
The other side of the budget is your expected ROI (Return On Investment). A minimum of 10% is a good starting point, if the estimate is below this, you may wish to reconsider.
It is advisable to get a full property structural survey done to avoid any nasty surprises. Visit the property before you buy and make sure you have all the paperwork to back up the purchase. Always seek professional legal advice before signing anything and enlist the relevant professionals to carry out surveys etc. Above all, be patient and take the time to ensure you have the deal that works for you.
If you would like to talk to one of our commercial property experts, please contact our offices and arrange an appointment today.
Selling Commercial Property
When selling a commercial property there is a lot to prepare prior to the sale. We would advise seeking professional advice right at the beginning of the process to ensure that you have all the documentation in place that you need.
It is important to keep lines of communication open with your buyer at all times. While communicating with them you will draw up the Heads of Terms and provide all necessary details such as the EPC and asbestos survey results.
The agreed Heads of Terms will be sent to your solicitor who will then obtain your title documents from the Land Registry office. Your solicitor is the one who will arrange the exchange of contracts and confirm all financial transfers. They are also there to answer any questions you may have during the sale process.
Wait for your buyer’s solicitor to communicate with your solicitor and send the contract package. The buyer’s solicitor may ask questions with relation to Commercial Property Standard Enquiries (CPSEs). The buyer’s solicitor should also be the one to carry out any due diligence. Due diligence may take several weeks and more questions may require answering during this period.
Contracts to Completion
Once due diligence has been completed, all documentation will need to be agreed and signed, including the transfer deed and the terms of sale contract.
The buyer will need to put down a 10% deposit to secure the exchange of the commercial property proceeds. Upon exchange, a completion date is set and this is a legally binding contract.
Once completion has taken place your mortgage will be discharged and you hand ownership and keys of the property over to the buyer.
Necessary Information About Your Property
You will need to prepare your premises to ensure they are being left in good working order. You will also need to provide details about your property for potential commercial real estate buyers. The paperwork includes commercial planning use classes, for example, Class A – Shops (including some services).
A Commercial Energy Performance Certificate, EPC will also be required. You’ll need to provide business rate details and any other costs that the buyer will be responsible for. Any important health and safety information such as the presence of asbestos will also need to be disclosed.
The CPSEs will also be sent by the buyer and you will be expected to know all the necessary information on this about your commercial property. Your solicitor can help you with this form.
How you are going to sell your property is another consideration as there are a few different avenues such as auction or through a commercial property agent. Whichever you choose, you will need to seek professional help throughout the process.
If you are looking to sell your commercial property and would like assistance from a professionally qualified solicitor, then please contact our offices today to speak to one of our advisors.