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Thinking buying or sale Commercial property?​

Think carefully about whether purchasing commercial premises is the logical next step for your business - take time to weigh up the pros and cons.

Advantage

  • You are free from worries about rental increases​
  • If the property increases in value, your business benefits from capital gains
  • You may be able to fix monthly payments, to give yourself security over your outgoings
  • Interest payments on commercial mortgages are tax deductible
  • You may be able to sub-let a portion of the property, to lessen your mortgage payments (so long as your lender agrees)
  • Your mortgage repayments are likely to be similar to rental on a similar property
  • You can re-mortgage to raise finance
  • You gain operational flexibility, because you can design the premises to suit your business, or to rebuild and extend as your business expands.

Disadvantage

  • You will need to provide a deposit of between 20% and 30% of the value of the property in advance
  • You will have to finance the upkeep and maintenance of the property
  • If the property loses value, it will impact on your business capital
  • Depending on interest rate movements, your mortgage payments could increase
  • You have less flexibility to cope with changes in circumstances - to take on more or less space, or to move to a different location - than if you are renting
  • Buying premises ties up cash flow which could be invested in new employees, or plant
  • You will make property ownership a central part of your business, exposing yourself to an unpredictable market. This could leave you with a large and unproductive asset, which still incurs costs.
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