Buying Commercial Property


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Download PDF 		The aim of the Bright Property website is for the purchaser and vendor to deal directly with each other, so we have produced this Buying Commercial Property Guide to help you.

STEP 1 – CONSIDERATIONS

What are you looking for?

  • Office
  • Industrial Unit
  • Retail Unit
  • Business Park
  • Mixed use

Why are you buying?

  • Owner Occupier - Does buying a premise, fit in with your business plan. Will owning premises give your business flexibility?
  • Investment Do you understand the commercial market? What are you alternatives
  • For Pension Fund

What can you afford?

Before you start looking for property it is a good idea to work out how much you can afford to spend. This may be dependant on the value of your current property, the amount that you can put down for a deposit and the mortgage you will need. You will also need to consider all the associated costs of moving home such as:

  • Mortgage costs
    The administration fee for setting up the mortgage and the mortgage valuation. Not all mortgagors charge for these. http://www.mortgagesforbusiness.co.uk/
  • Survey
    It is recommended that a detailed survey of the property is undertaken so that you are fully aware of any defects prior to purchasing. A full survey (not just a valuation) is essential, to check:
  • The actual size of the premises. (This may vary from the vendor’s details).
  • Whether the building complies with building regulations.
  • The estimated cost of any current or future building repairs.
  • The condition of services, such as lifts.
  • Whether any dangerous materials were used in the construction, such as asbestos or high alumina cement, which may need to be removed or replaced.
  • Any unusual problems that might otherwise be overlooked.


  • You may need a specialist. For example, a mechanical survey of the lifts or the air conditioning equipment.
  • Make sure the survey covers all your areas of concern. (The surveyor cannot be not held responsible for things he or she does not agree to check).
  • Check the cost and timing of any work that needs to be carried out.
  • Check that the surveyor has professional indemnity insurance.
To find a surveyor go to http://www.ricsfirms.com/vw/search/location.aspx

  • Legal/Conveyancing Fees
    The solicitor or conveyancer will check all aspects of the legal title to the property to ensure there is nothing onerous which may affect subsequent sales. It is important to ensure that you are confident with your chosen legal representative before appointing them. You can find details of solicitors or conveyancers in your area by going to the Law Society Website. http://www.lawsociety.org.uk/choosingandusing/findasolicitor.law
  • Stamp Duty
    the Land Tax on property i.e., houses, flats, other buildings and land. If the purchase price is £125,000 or less (effective 23 March 2006), you don't pay any Stamp Duty Land Tax at all. If it's more than £125,000, you pay between one and four per cent of the whole purchase price, on a sliding scale. http://www.hmrc.gov.uk/manuals/sdltmanual/SDLTM00050.htm
  • Land Registry Fee
    The Land Registry is a government department which looks after the registers of all registered properties in England and Wales. It charges a fee for transferring the register to the new owner. This fee is charged according to property price.
Price (£)
Fee (£)
up to 40,000 40
40,001 – 70,000 60
70,001 – 100,000 100
100,001 – 200,000 200
200,001 – 500,000 300
500,001 – 1,000,000 500
1,000,001 and over 800

  • Local Authority Search Fees
  • Other Search Fees and Disbursements
  • Property search expenses
  • Removal Fees
  • Building insurance
  • Contents insurance
  • Disconnection of services (water, gas, electricity, telephone)
  • Mail redirection
  • Contingency fund
  • Business Rates
  • Service Charge – If the property is within a building or on a business park there may be a shared responsibility for the maintenance, cleaning, security of the car park and building. Generally you will be required to pay this separately to the rent.
  • Maintenance costs of the premises
  • VAT -in some cases, VAT may be payable on the purchase price.
STEP 2 - CHOOSING YOUR PROPERTY

It is worth drawing up a list of the things that you want from the property. Though bear in mind finding the perfect property is not always possible and compromises may need to be made.

Things that you may need to consider:
  • Location Location Location! _ the key phase is property searching
  • Type of Property – Office, industrial unit, mixed
  • Size
  • Features of the Property – Industrial unit with ancillary office
  • Freehold or Leasehold
  • What planning use
  • Infrastructure – roads, rail and public transport links, broadband
  • Business Rates
  • Development – is there any major development taking place in the areas, this maybe a positive factor in the long term but an inconvenience in the short
  • Is the location right _ near to suppliers, infrastructure, competitors?
  • What condition is the building in?
  • Can you alter the building to meet your specific needs?
  • Is there sufficient car parking?
  • Is the price of the property comparative to local property prices
  • Environmental Considerations – e.g. development on a flood plane The environmental agency website can provide information about this http://www.environment-agency.gov.uk
  • Pollution/Contamination – previous use, vicinity to development and the surrounding area.
Where to look:
  • Register with Bright Property under the Wanted Ad
  • Search Bright property
  • Estates Agents/ Chartered Surveyors
  • Internet
  • Local press
  • For Sale Boards
Viewings tips:
  • Where possible try and arrange viewings as soon as the property comes on the market
  • Take the property detail along with you and a contact number if you are running late
  • Make notes – as you may not remember all aspects of the property if you are viewing many
  • View the property a number of times if you need to. At different times of the day, weekdays, weekends etc so that you get a feel for it
  • Look round the area
  • If you are going on your own make sure somebody knows where you are.
  • Carryout a space planning exercise
STEP 3 -MAKING AN OFFER

Tips to help with negotiation:-
  • How many people have viewed the property?
  • How long has it been on the market?
  • Why is the vendor selling it?

In most cases there is an element of negotiation when purchasing a property. It may be in respect of the price, condition or the fixtures and fittings. If you are purchasing a property advertised on Bright Property website you will be making the offer direct to the owner. Offers can be made either verbally or in writing (Subject to Contract) and can be conditional e.g. pending:

  • The results of a property survey.
  • Planning permission or other approvals.
  • Confirmation that any previous occupant has moved out (‘vacant possession’).
  • Contract conditions and property searches.
  • Finance being arranged.

Upon agreement of the price it is worth confirming the details of the sale in writing so that both parties are clear what has been agreed. The property should then be taken off the market and "sold" put on the board and "under offer" on the advert.

STEP 4 - LEGAL WORK, SURVEYS AND VALUATION

Once the offer is accepted you are then need to advise or appoint your solicitor and surveyor if you are using one.

Obtain quotations in writing detailing the work they will undertake and the costs involved. If you are having a mortgage, generally they will instruct a surveyor to carryout the valuation. Though you may need to arrange convenient times with the vendor for surveys and valuations to be done.

The solicitor will undertake what is known as due diligence i.e. establishing the following:-

  1. Who owns the property and do they have the right to sell the land to you?
  2. Are there any restrictions on the use or alterations to the property?
  3. Are there any current or future planning decisions which may affect the property?
  4. Are there any guarantees available with the property?
  5. Are there any problems with the premises? For example: Does the property have all mains services? Boundary or Neighbour disputes. Connections to the mains services
  6. What fixtures and fittings are included in the sale? Is the equipment owned by the vendor?
  7. Are their any warranties with the equipment included?
STEP 5 - THE LEGAL PROCESS

  1. Contract
    The contract will then be drawn up by the Seller’s solicitor/conveynacer which sets out the main terms of the proposed agreement, including your names and the agreed price; this will then be sent to the buyer’s solicitor. At this stage searches will be carried out.
  2. Searches
    If you need assistance moving now is the time to get quotes from removal companies or enquire about hiring transport.
  3. Exchange
    One the contract is agreed and all searches and surveys have been undertaking the contracts can be exchanged and a date agreed for exchange. At this point neither party can withdraw easily without the possibility of incurring financial penalties.
  4. Completion
    At completion the Title Deed and transfer document will be transferred to the solicitor in exchange for the money for the property. Arrangements then have to be made for collection of the keys and then you are ready to move!






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