When buying is the right move to make

THERE are specific circumstances when buying commercial property may be better than renting.

For example, anyone aiming to open a newsagent and wanting to live above the shop or where capital appreciation could add to a firm’s pension fund may make buying better, says Business Link.

There are difficulties associated with buying, not least getting a commercial mortgage. These products are over a shorter term, so repayments can work out higher than rents.

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And, of course, buying means using money which could have been invested another way.

But there are significant advantages to weigh up. Buying gives freedom to use as you wish, subject to planning or other conditions.

If a property gains in value, that is future profit, it can also be let for another income stream. And there are no fixed term contracts.

Before a property is chosen, there are a number of critical decisons to make. These include decisions about the type of premises, how much space is needed, facilities required, budget and, vitally, location.

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Location may determine passing trade, being close to suppliers orto banks or post.

There are other things that can affect suitability. Parking and delivery, business rates and local authority charges for things like waste collection.

Business Link reckons whatever option is taken there will be disadvantages. Being in the high street may be convenient but it might also be costly.

It’s worth investigating grants, loans on preferential terms and incentive schemes set up to tempt small businesses into urban areas, such as grants from inner city renewal projects, or cheaper premises for small businesses in designated areas.

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Businesses buying commercial properties may have to budget for professional fees, VAT and Stamp Duty Land Tax, searches or enquiries with the local authority or Companies House, alterations and fitting out.

Other ongoing costs include insurance, repairs and maintenance and running costs for security staff.

It is worth investigating whether a business can claim capital allowances towards the cost of renovating or converting premises.

Once the right property has been found, compare the price with other similar properties in the area.

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Once satisfied you can then make a conditional offer to the agent, who is obliged to forward it to the client, the vendor.

Business Link advises getting a lockout agreement. This means that the agent will not market the property or negotiate with anyone else about selling it.

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