Whether you’re an owner-occupier or a tenant — and whatever the nature of your business — property issues will almost certainly demand your attention at some time during the life of your company.
To ensure your enterprise continues to get the maximum possible value from its real estate it’s important to understand all the issues and implications and to deal with them in a proactive way.
Here are six suggestions from chartered accountants Grant Thornton to help you get the most from your property:
- Line up your business strategy with your property planning. Ask yourself whether you’re using your premises to fulfil your organisation’s key objectives. Successful real estate strategies tend to have three common characteristics: minimising cost, minimising risk and maximising value.
- Make the most of your assets. If you are trading from a property you own, then you could be using it as collateral to finance business expansion. It’s also important to have a landlord who understands the business you’re in and supports your growth plans. The right partner will appreciate that having a successful tenant will maximise the long-term value of their property — and this could also give you an advantage when renegotiating the lease.
- Evaluate your sites. If you operate from a number of locations, look at their viability and efficiency closely. It’s also worth reviewing their redevelopment options — can you transform older buildings from liabilities into assets. And if you’re considering redevelopment, can you demonstrate the increase in profitability to prospective lenders?
- Understand the real risks of property. Poorly maintained real estate can significantly affect the operation of your enterprise. Being forced to constantly deal with day-to-day maintenance takes your attention away fulfilling your strategy of making a profit. What should you be doing instead of calling the plumber or getting quotes for a new roof?
- Carefully consider the costs of buying a new business. Many entrepreneurs do not fully appreciate the property aspects of acquiring a venture. It’s essential to factor-in potential real estate financial commitments such as dilapidations, and how should you treat these liabilities? You might well be able to negotiate a lower price for the acquisition?
- Take advantage of tax incentives. There are a number of tax incentives for existing and newly acquired UK property portfolios. Capital allowances are a deduction available for certain capital expenditure and are a valuable incentive. Also, remember to consider transactions between landlords and tenants; incentive payments often result in different tax treatment for both parties and can significantly increase the tax bill.
Finally, remember some aspects of property ownership and management are harder to measure than others. If the place of work is disliked or considered unsuitable by your employees, you may lose talent to companies that can offer a more attractive place in which to spend their working day.
