Should you Buy or Rent a Commercial Property?

Posted on 20 August, 2011 by MOVEHUT

When searching for a commercial property for your new business venture, often businesses wonder whether they should buy a property or just rent one instead. Both have benefits and detriments but it really does depend on how you wish to use the commercial property.

Many small businesses do not have the funds available for a deposit on a mortgage to purchase a property and often the decision to rent is therefore already made. However if buying a property is an option, there are many advantages:

  • You can decorate and alter the building (sometimes subject to planning permission)
  • You can occupy the premises yourself or rent it out to someone else
  • You can budget your finances especially if you have a fixed-rate mortgage
  • The value of the commercial property may rise over time.

However, there are disadvantages which are mainly based around money. You will require a big deposit to secure a mortgage and also will need to pay solicitor fees and stamp duty. Money will also need to be set aside for any maintenance and repairs that the property may need. Also selling the property in the future could be quite expensive with surveyors and estate agent fees.

If this all sounds too much maybe renting would be more suitable for you. But it does depend what you have agreed with the landlord in the lease. The lease will detail how much the rent is, what you are responsible for and how long it lasts etc. But you should always read the lease carefully before signing as it may include fine points that you were not aware of, such as your obligation for maintenance and repair issues, for example.

Like most choices in life, there are good and bad points to buying or renting a commercial property. Before committing to either, check what finance you have available and what property would best suit your needs.

 




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