Buying Commercial Property – Top Tips before you sign11th February 2019
1. Check the boundaries
• You must check the plan provided against the boundary on the ground. If you have any doubts as to the accuracy of the plan you need to flag this to your solicitor as soon as is possible so that this can be clarified before completion.
• As an example an area fenced off within the boundary may have been sold to a neighbour or being used by another party which has not been updated at the Land Registry. Inform your solicitor and ask the seller about any concerns.
• Once completion has taken place it is very difficult to go back and try to remedy any boundary issues.
2. Look at the construction and condition of the building
• Is the property in good condition? How and when was it built?
• You should organise a building survey so that you can factor in any hidden repair costs, for example the removal of Asbestos or repairs required to the roof.
• If substances such as asbestos are found, you need to speak with your seller to see if they have made any arrangements for its removal or have an asbestos management plan in place. Whilst your solicitor will be able to ask for copies of any reports and plans, you will need to seek expert advice to deal with such materials in going forward.
3. Are there any additional costs?
• Is the building that you are buying subject to VAT? Whilst VAT is not normally charged on property transactions, commercial property owners in particular commercial landlords may have elected for VAT making it payable. You need to consider this before you agree a price as a potential 20% uplift could affect your ability to purchase the building.
• Does the property form part of or an estate? If so you may be required to pay wider estate maintenance charges for the upkeep of estate roads and communal areas.
4. Do you need any permissions/consents?
• Consider if you will need any permissions for your intended use and fit out of the property. Where these permissions are required, would a contract conditional upon you obtaining the permission work better for you?
• If your property forms part of an estate will you need permission from the estate owner before you make any changes to its appearance?
5. Is your funding in place?
• It is crucial that you have your funding organised before your proceed with your purchase.
• You will need to be able to transfer your deposit monies by cleared funds (not by cheque for example) on the day of exchange and to have your completion monies in place before a completion date is set.
• Transactions will often fall through as a result of a seller becoming frustrated that a buyer is not in funds. Consider the funding options for your purchase before you make an offer and if you are securing a mortgage tell your seller so that they are better advised as to the timescales.