Finding the Right Business Property
To find the right premises for your business is a complicated process involving a range of factors, from location to affordability. This guide takes you through the process, from assessing your needs to deciding between buying and leasing:
- What sort of premises do you need?
- Where to look for a property
- What to consider before you commit to a property
- The pros and cons of buying and leasing
- Useful contacts
What sort of premises do you need?
Being clear about your requirements before you start looking will save time and money. The basic considerations include:
- Property size is usually calculated on a square footage rate, so it may be useful to work out how much space you will need, and base your budget around that.
- In addition to moving costs and the lease or freehold, you may also need to pay for refurbishment and/or new equipment.
- How accessible does your property need to be for customers and/or suppliers?
- Could environmental factors such as noise or pollution be an issue?
- How close are your local competitors?
- What are your requirements for parking, meeting rooms, reception areas, warehouse space and storage?
- If the premises are part of a larger business park, what facilities are available on a shared basis?
Where to look for a property
There are a number of places to search for likely premises, including:
- Online and newspaper listings.
- Estate agents.
- Local authority registers of vacant properties and managed workshop units.
- Local industrial estates and business parks.
Many of these outlets can add your name to a waiting list, or sign you up for regular property newsletters, which are useful to give you a feel for what’s available and typical market prices.
You could also hire a consultant to draw up a short list for you.
What to consider before you commit to a property
Once you have found a suitable building or space, more in-depth investigations are required to ensure that it will be a sound investment. The most important aspects to consider include:
- Legal status.
- Additional expenses.
Is there sufficient gas, water, electricity and drainage capacity?
You will need to carry out a thorough survey of the structural state of the building. Contact the Royal Institute of Chartered Surveyors for surveyors in your area. You should also check:
- Does the property have planning permission?
- What is the property grading and will it be possible to agree a change of use if you needed it? (Talk to the local town-planning officer about renovations.)
- Does the building have any history of subsidence or damp?
- Is there a history of flooding in the area?
The building will need to comply with:
- Disability discrimination laws.
- Health and safety regulations.
- “Hidden” costs such as security, cleaning, rates and service charges.
- Insurance premiums.
- Your local council’s business rates.
The pros and cons of buying and leasing
The usual ways to occupy commercial property are freehold or leasehold. Take some time to consider the pros and cons of each…
- You have the freedom to use the building as you wish, within the law.
- Businesses with limited or no financial history can find it difficult to obtain commercial mortgages and may have to pay a substantial deposit.
- For a start-up, freehold carries a big financial risk: you’ll need to ensure that you can generate sufficient profits to keep up repayments and cover any increases in interest rates.
- Leasing requires minimal capital outlay at the start.
- Compared to freehold, there is less financial risk.
- Usually the lease is renewable and you have the right to remain (unless you renege on your contract or the landlord wishes to reoccupy the premises).
- You are likely to have restricted use of the property, including the right to make alterations to the building or sub-let any extra space.
- Agreeing the terms of the lease can be complicated.
Checking a lease
A solicitor can guide you through the small print of your contract. Important details to look for include:
- The length of the lease and who owns it.
- The terms of any break clause, which enables either party to terminate a tenancy before the end of the lease.
- Who is responsible for repairs and renewals?
- How often is the rent reviewed and can you negotiate a rent ‘cap’?
- What will the services charges be?
- Do you have to give a personal guarantee?
- Can you reassign the lease if your business needs change?
Royal Institution of Chartered Surveyors (RICS)
A leading source of land, property, construction and related environmental knowledge.
Lawyers for Your Business
A network of 1200 solicitor firms in England and Wales offering specialist advice to small and medium-sized businesses.
Health and Safety Executive
The organisation responsible for health and safety regulation in Great Britain.
My Business Rates
An online government information resource for business ratepayers.
This Finding the Right Business Property business advice article published in association with Lloyds TSB.
Whether you are looking to start-up a business account or want to move your existing business account Lloyds TSB can offer you all the Business Banking support you need
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