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Buying Commercial Property in London: A Guide
- General Resources
- Buying Commercial Property in London: A Guide Back to List of Guides
Buying commercial property in London is not the most common practice with many favouring to rent business premises. Despite this there are many advantages to investing in your work space, below is a guide to help you with the process.
Commercial property for sale in London can be broken into four principal sectors:
- Offices – standard offices and business parks
- Retail – shops, shopping centres, retail warehouses, department stores and supermarkets
- Industrial – industrial estates, warehouses, land
- Leisure – restaurants, pubs, hotels, leisure parks.
If you wish to buy business premises in London, there are a few more things to bear in mind than with an ordinary house purchase. This guide to buying commercial property in London should introduce you to everything involved, from choosing the right kind of property for you to exchanging contracts and moving in.
Whether you are searching for an office, shop or restaurant to buy in London, Currell Commercial property agents in London will have the perfect property for you. For more information, please pop into one of our London offices, and our staff will be happy to offer you further advice.
Buying Commercial Property in London – Advantages and DisadvantagesBack to top
If you are a small or new business without the capital to buy a property, renting may be a more viable option. For larger businesses, businesses that have formed a professional partnership or, for instance, if you own a shop or pub (and wish to live above the premises), buying your own commercial property can have a number of benefits for you.
Advantages to buying your own commercial property:
- Freedom – to use the property, redesign, decorate, make repairs and move when you wish
- No rental increases, and you may be able to fix your mortgage monthly payments
- Profit – if the building gains value, you will be the one to profit
- Sub-let – you may be able to let out part of the property to lessen your mortgage repayments
- Let – in future, if your business moves, you can let the property to receive another income
- Interest payments on commercial mortgages are tax deductible.
Disadvantages to buying your own commercial property:
- Capital – you tie up a lot when you commit to buying a property, which could be invested elsewhere in your business
- Time – if you need to make alterations or building work, you will
- Responsibility – you will be responsible for the safety of the building, health and safety and fire precautions
- If the property loses value, it could impact on your business capital.
As a general rule, buying commercial premises often has a higher overall cost than renting for the first five years, equal for the next five years, and then cheaper from then on. Anyone looking to buy commercial property should therefore view it as a long-term investment for your business.
Choosing the Right London Commercial Property to BuyBack to top
Commercial property for sale comes in a range of shapes and sizes, and which type of commercial property you choose to buy will depend on the requirements of your business. Before you choose a commercial property to buy in London, you should think about which of these premises is most suited to your business, whether this is an office, factory, shop or combination of these. When looking for London commercial property for sale, you may also wish to consider:
- Space – how much you need for your business activities
- Facilities – which ones you will require (such as electrics, parking etc)
- Impressions – what impression the building will give customers and clients
- Budget – whether the property in your price range
- Productivity – whether the building will be comfortable and productive for your staff to work in
- Legal Requirements – whether the property meets health and safety and fire requirements.
Whatever type of property you opt for, the property will be either:
- Freehold – An interest in land that is not limited by time. The owner of a freehold generally owns the land itself and any buildings / structures on it. Or
- Leasehold – A time limited interest in land, although leasehold interests can be virtually perpetual (long leases can be granted for 999 years). Generally, the flats and property in Central London is held on a leasehold basis.
Currell Commercial can help you to find the right type of property to buy in London. Please browse our website, which has a range of commercial properties to buy in London, and is updated daily.
Choosing the Right London Location to Buy Commercial PropertyBack to top
A good location for your business is vital. When searching for commercial property for sale, make sure it is in a location that best suits your business needs. For examples:
- Retailers – may need to be close to your customers, suppliers and other London retailers. You may also need good visibility, to attract passing trade
- High Tech Communications – may wish to choose a location outside the City centre, to get more office space for your money
- Goods Producers – may need to look for a commercial property with excellent transport links
- Media Offices – may need to consider the commuting needs of staff and clients, and whether the area they move to ‘suits’ their business brand
- New Businesses – may wish to consider moving to a location in Central London. Though you will have to pay more for your premises, your choice of potential employees will be greater.
When searching for commercial property in London, you may also wish to consider other factors that may affect the suitability of the premises for your business, including:
- Parking facilities, congestion charges and delivery restrictions
- Transport links
- Local authority charges and business rates
- Local planning restrictions, and whether they will allow you to use the property as you require
- Local crime rates
- Local amenities for staff and clients, including restaurants and supermarkets
- Generally flats in Central London are held on a leasehold basis.
Whatever commercial property you choose there will be advantages and disadvantages to its location. The trick is to get the most suitable location for your individual business.
Financing Your Commercial Property in LondonBack to top
When you find the right type of property in the right location for your business, unless you have a large amount cash to spare, you may need to get a commercial mortgage to finance the property’s purchase. Please be aware that to get a commercial mortgage, you will need to commit to a minimum mortgage term (often of about 15 years), and pay a substantial deposit.
As part of your mortgage application, you will need to arrange for a survey to be carried out. This survey will assess the value of premises, the property's condition and investment value, and the state of the commercial property market. You should arrange to have this survey carried out yourself, rather than rely on your bank, as you would be liable for any problems that are overlooked. Your lawyer will then be able to advise you on your mortgage contract, and negotiate the terms of your mortgage arrangement.
London Commercial Property CostsBack to top
Buying a property requires a variety of costs, on top of the property purchase. These include:
- Professional Advice Fees – for the surveyor, solicitor and any other professional advisor you employ
- Enquiry Fees – for making searches or enquiries with the local authority
- Stamp Duty Land Tax and VAT (though not in every case and you may be eligible to claim it back).
Setting up your premises may also require you to set aside a small budget for:
- Office furniture and equipment (depending on what you need)
- Removal costs from your old premises, to your new premises
- I.T. and telecoms system set up fees.
When financing your property, you should also consider the ongoing costs of your new premises, which include:
- Repairs / maintenance
- Services – such as cleaning or security
- Local Authority Charges – for services such as parking and waste collection
- Business Rates – the Valuation Office Agency (VOA) is responsible for the business rates valuation, which based on what the property would rent for at a given date, and revise them every five years
- Running Costs – for example lighting, air conditioning and heating.
Please note: when you buy a property, the seller should provide you with an Energy Performance Certificate (EPC) with an energy rating. This EPC can give you a good indication of a building's energy efficiency and the likely energy costs. If the building energy costs are higher than you think you can afford, bear in mind you can make savings by having your air conditioning and boilers inspected.
Exchanging Contracts on a London Commercial PropertyBack to top
Once your surveyor and solicitor have negotiated the terms of contract with the seller, any planning permission you require has been approved, all the necessary checks on your building have been made, and all parties involved are happy with the contract... you may be ready to exchange contracts.
Exchanging contracts makes the purchase legally binding. Up until this point, beware that you may be at risk of being ‘gazumped’ by other potential purchasers – if the seller opts to sell the property to another party last-minute, usually at a higher price. To prevent being gazumped after putting in an offer for a property, try to negotiate an agreement to stop the seller negotiating with anyone else.
When you exchange contracts, you will need to pay your deposit on a property. Once this has gone through, you are ready to complete the purchase to become the owner of the property. On the day of completion, your solicitor will hand over the purchase price (paid by the mortgage company or lender) to the seller’s solicitor – which is when your repayments to the lender will begin.
Some last few things to do during completion:
- Insurance – make sure you have adequate insurance in place
- Stamp Duty Land Tax – needs to be paid
- Land Registry – register your ownership
- Health and Safety – check whether you need to register your premises.
Your solicitor will receive the deeds (papers giving details of the property and the owner) to your commercial property – these deeds are then sent to the lender.
For a commercial property to buy in London, please browse Currell Commercial property agents variety of commercial property. Whether you need to buy office space, a shop or an industrial unit, we are sure to have the right commercial property for you. Or for more information, please give us a ring or come into our Commercial office at 309 Upper Street, Islington, London N1, and our staff will be happy to assist you.