A company that owns the freehold in the premises that it occupies can count that as another of its business assets, but it is essential to be aware of the positive and negative elements associated with acquiring a commercial property freehold.
Acquiring a commercial property freehold
Positives
Owning a property outright provides a business with a degree of independence and flexibility, which is rarely found in leasehold provisions, and also allows for the long-term security of a business.
A company that owns the freehold can make, or apply to make, changes to the property that it occupies (subject to necessary planning approval) and is able to occupy the premises for as long as it likes. There is also the option to potentially generate income from the property via rent if the business decides to sub-let the property in whole or in parts.
The overall value of the property is also likely to increase over the long term, regardless of whether a business is successful or not, meaning that an organisation will usually benefit in the long run, if it decides to sell the property.
Negatives
Funding the purchase of a commercial property freehold is obviously very costly and whilst there is a possibility that a company could get a commercial mortgage, in order to do so it would need to convince the lender to provide the company with the funds. The company would need a large deposit (typically between 20% and 30% of the property value) and a comprehensive business plan to provide to the lender.
Other issues related to owning the commercial property freehold is that you would need to be aware of all the laws and risks associated with the process, including asbestos and fire safety regulations, and would also be responsible for all maintenance and repair work.
It is also worth bearing in mind that there are also other issues to consider, such as property repairs and maintenance costs and building insurance, which can be very costly.
How can Nelsons help?
If you are looking to purchase a commercial property freehold for your business, it is essential that you choose the correct premises for your organisation, based on the following requirements:
- Space
- Use
- Functionality
- Future needs of the company
Nelsons’ expert Commercial Property team are able to help with the following:
- Legal due diligence
- Identifying legal problems and how they can be overcome and used to a company’s advantage during negotiations
- Searches and pre-contract enquiries
- Legal Title Restrictions
- Drafting and negotiating the agreement for sale or purchase
If you require any advice, please contact a member of the team on 0800 024 1976 or contact us via our online form.
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