Making the right decision for you and your business

Knowing what’s right to do for you and your business can be a tricky decision to make. Quite often you need to consider more than the business’ immediate needs and think what’s best to do for the long-term.

 

Buying

Renting

Overall, buying tends to be more expensive than renting for the first five to seven years. After this, it becomes cheaper. 

Many businesses do not have the financial resources to buy and so renting is the only option available to them.

No threat of rental increases, but mortgage rates can go up. Overall, renting tends to be cheaper than buying for the first five to seven years. With commercial leases for business premises the rent is usually payable in advance 4 times a year.
Commercial mortgage interest is tax deductible Renting is often the best option if you are uncertain of your long-term needs. The most flexible option is a short lease, or a lease that provides the option to end it early on.
You will usually need to be able to pay between 20% and 30% of the value of the property if you use a mortgage to finance the rest of the purchase cost.

However the commercial lease, that sets out the rental terms, may contain complex requirements for you and your business to comply with.

Buying premises can tie up money that could have been  used to invest in additional staff or equipment. Rent reviews (increases) need to be allowed for. They can be a cause of uncertainty for your business (even though the review dates will usually be in the lease).
Buying can be an investment. If the property increases in value, your business benefits from capital gains and you can re-mortgage to raise finance. The lease is likely to require that you pay the repair and maintenance costs for property which you do not own.
You may be able to sub-let a portion of the property, giving you capacity for growth and offsetting some of the mortgage interest. You have less flexibility than with owning, to cope with changes in circumstances. The landlord may place restrictions on how you alter the premises or how it is used or sub-let.
You have greater control over how you use the premises (subject to planning permission and your mortgage provider).  

 

To buy or to rent is an issue you can discuss when you use our Free Initial Assessment service – you can talk through any concerns or questions you have with one of our specialist business property lawyers. It is best to do this before you invest time and money in committing to go ahead. We will help you understand the likely costs, timescales and any risks associated with the transaction.

Having a lawyer on your side means your business won’t get caught out with a legally binding agreement which causes your business future problems, commits you to avoidable payments or means you’re stuck with a property which isn’t right for your planned use.

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