Buying your first commercial property is very different from purchasing a home.
Whether you are acquiring premises for your own business, buying an investment property or purchasing a building with redevelopment potential, the financial commitment can extend far beyond the agreed purchase price.
Repair liabilities, business rates, statutory compliance, future maintenance, building services and restrictions on how the property can be used can all have a significant effect on whether the purchase represents good value.
The key is therefore to understand what you are actually buying before you become legally committed.
At Stokemont, our Commercial Building Surveyors assist purchasers by inspecting properties before acquisition and identifying defects, risks and potential future expenditure.
Here are 10 important checks to make before purchasing your first commercial property.
1. Be Clear on Why You Are Buying the Property
Establish exactly what you need the property to achieve.
Are you buying premises for your own business, acquiring an investment, purchasing for redevelopment or intending to occupy part and let the remainder?
Your objectives will influence the type of property, location, condition and flexibility you should be looking for.
2. Check the Property Is Suitable for Your Intended Use
Consider whether the building physically and legally works for what you intend to do.
Look at matters such as floor area, access, servicing, loading, ceiling heights, power requirements, ventilation, customer access, storage and parking.
You should also establish whether your proposed use is acceptable from a planning perspective.
3. Understand the Building’s Actual Condition
A commercial property can look perfectly presentable during a viewing while concealing significant repair liabilities.
Potential issues can include defective roofs, water penetration, structural movement, deteriorating façades, ageing windows, drainage defects and historic alterations.
A Commercial Pre-Purchase Building Survey provides an independent assessment of the condition of the building before you commit to buying it.
4. Understand the True Cost of Ownership
The purchase price is only one element of the overall cost.
You should also consider:
- repairs and refurbishment;
- future planned maintenance;
- professional and legal fees;
- financing costs;
- insurance;
- business rates;
- utilities;
- service charges;
- statutory compliance; and
- taxation associated with the purchase.
It is particularly important to understand whether significant expenditure is likely during the first few years of ownership.
A building that appears attractively priced can quickly become considerably more expensive if the roof, windows or mechanical plant require major works shortly after completion.
5. Assess the Location
The right location depends on the type of property and how you intend to use it.
Retail occupiers may prioritise footfall and visibility, while offices may depend more heavily on transport connections and local amenities. Industrial users may instead require good vehicle access, servicing areas and loading facilities.
For investment purchases, consider the location from the perspective of future tenants as well as your own.
6. Check the Business Rates
Business rates can represent a significant ongoing cost.
Before purchasing, establish the property’s current rateable value, likely rates liability and whether any relief may apply.
This is particularly important when comparing properties, as two buildings with similar purchase prices can have very different ongoing occupational costs.
7. Review Energy Performance and Building Services
Consider the property’s EPC rating together with the wider efficiency of the building.
Heating, cooling, insulation, glazing, lighting and mechanical plant can all affect both running costs and future capital expenditure.
Older commercial properties may require considerable investment to improve their energy performance.
8. Check for Asbestos and Other Specialist Risks
Older commercial properties may contain asbestos-containing materials.
Before purchasing, establish whether an asbestos register or management survey exists and whether further investigation will be required.
If you intend to undertake refurbishment or intrusive works, additional asbestos surveys may be necessary.
A Commercial Building Survey is not an asbestos survey, so specialist advice should be obtained where required.
9. Consider Accessibility and Future Flexibility
The property should work for your current requirements while also allowing for future change.
Consider accessibility for staff, customers and visitors, together with matters such as entrances, circulation routes, lifts, WC facilities and changes in floor level.
You should also consider whether the building can adapt if your requirements change.
Could it accommodate additional staff, alternative layouts, subdivision, different tenants or future redevelopment?
A flexible commercial property is generally easier to occupy, let and ultimately sell.
10. Know What You Will Do if the Survey Identifies Problems
Finding a defect does not necessarily mean you should walk away from the purchase.
What matters is identifying it before you become responsible for it.
Depending on the findings, you may decide to obtain specialist advice, request further investigations, obtain repair quotations, renegotiate the purchase price, seek contractual protection or reconsider the acquisition.
A major defect discovered before exchange gives you options. The same defect discovered after completion becomes your problem.
Commercial Pre-Purchase Surveys
A Commercial Pre-Purchase Building Survey provides an independent assessment of the physical condition of the property before acquisition.
Depending on the property and agreed scope, our surveyors typically consider:
- roofs;
- external walls and façades;
- structural movement;
- internal construction;
- floors and ceilings;
- windows and doors;
- damp and water penetration;
- visible drainage;
- accessible building services;
- previous alterations;
- common areas;
- external areas;
- likely repair liabilities; and
- areas requiring further specialist investigation.
Our aim is to help you understand not simply what defects exist, but what those defects could mean financially and practically once you own the property.
Buying Commercial Property in London?
Stokemont’s Commercial Building Surveyors assist owner-occupiers, investors and property professionals with commercial property acquisitions throughout London and the surrounding areas.
Our Commercial Pre-Purchase Building Surveys are designed to help you understand:
- what condition the property is in;
- what defects are present;
- what expenditure may be approaching;
- what requires further investigation; and
- what you should know before committing to the purchase.
Speak to a Commercial Building Surveyor
If you are considering purchasing a commercial property, send us the property address and sales particulars.
We can review the building, confirm the appropriate survey scope and provide a quotation for a Commercial Pre-Purchase Building Survey.
