Owning the freehold on business premises means that you own the property and the land it occupies. If you’re a leaseholder, however, you only have the right to use the premises for the period of time specified in the lease.
When selling a business, ownership rights of a commercial property are a key area of focus, and can have an impact on the sale. If you’ve purchased the freehold of your own commercial property, you’ve already made a considerable investment and benefit from the autonomy of full ownership.
So what does owning the freehold, or operating under leasehold arrangements with a commercial landlord, mean for the sale of your business?
If you own the freehold for your commercial premises it means you’re the legal owner of that property, and there are no restrictions on whether or when you can sell it as part of a business sale. You can also sub-let one or more areas of the property if you need to generate additional income.
Operating your business from a leasehold property, on the other hand, means you need the approval of your landlord before the lease can be transferred to the new owner when the business is sold.
So is it better to operate under a leasehold arrangement when selling a business, or own the freehold of your commercial property? Here are some considerations.
Pros and cons of owning the freehold of a commercial property
Pros and cons of leasehold commercial property in a business sale
When selling your business, seek tailored advice on your own situation and on how the ownership rights of your commercial property could impact a business sale. Professional business sales brokers with extensive experience of facilitating successful business sales can support you throughout the sale of your business.
Read our in-depth guides on commercial properties, from selling your property to finding the right property to buy.