Autumn Budget 2025
Buying a commercial property is a decision that needs serious consideration as you need to assess if the space available suits your business.
There are plenty of factors to consider and there are steps you need to take, like inspecting the property and speaking with a solicitor before deciding to invest.
What do I need to consider before purchasing a commercial property?
A big factor is the location, as you need to decide if the location is best suited to your needs, like attracting customers and having good and accessible facilities and for your team and visitors.
Another factor is the size of the property itself. Is the space going to meet your company’s needs? Is it future proof to accommodate growth?
The property is a business investment and it needs to give you the ability to grow your company.
There is also the physical condition of the property to consider because this will likely impact your budget if serious work is needed to improve its current state.
If you are interested in any commercial space, you should conduct an inspection and look for any signs of concern and repair work that may need to be done.
You should also speak with a conveyancer and get them to complete a search of the property so they can also highlight any issues before you finalise any purchase.
Understanding easements and restrictive covenants
When purchasing commercial property, it’s important that you understand what easements and restrictive covenants are.
An easement is your legal right that allows you to use another person’s land for a specific reason without owning that land outright.
Easements are legally binding and help a property function effectively, like ease of access, drainage facilities and utility connections.
An example of an easement is if the property’s access point crosses into the property next door. If this is the case, under the easement, you would legally be allowed to use that land.
In contrast, A restrictive covenant is a legally binding rule that limits how a property can be used.
The restrictions on the property will be included in its deed and examples of a restrictive covenant include building extensions and running a business from the property.
Its purpose is to protect neighbouring properties and the local area and allows them to take legal action if the laws are not being followed.
It’s important you consider both easements and covenants before purchasing a commercial property, and they will clarify things you can and cannot do.
It is always best to consult with a solicitor if you are unsure about any easements or restrictions placed on the property.
Both can be challenged, but that doesn’t guarantee they will be removed from the property and they will stay in place even if land ownership changes.
You have to be sure the property aligns with your plans because any restrictive covenants will likely mean you need to reassess and find an alternative solution.
The importance of clarifying whether the property is leasehold or freehold
As well as the overall facilities and aesthetics of the property, you also need to consider the property’s status, whether it is on a lease or freehold, as there are distinctive differences between them.
Purchasing a freehold property means you become the outright owner of both the property and the land it stands on.
Providing you meet local planning permission requirements, it is yours to do with as you please.
However, it’s very expensive from the outset and you need a healthy budget even after completing your purchase, as you are solely responsible for the property’s maintenance and tax obligations.
A leasehold commercial property allows you to own the property but not the land it sits on.
The lease itself should explain clearly what the property can be used for, the changes you are legally allowed to make, your maintenance responsibilities and what happens should the lease expire.
As it is on a lease, you would have to exit the property once that lease expires, which is why it’s important you check the length before agreeing to any purchase.
Ideally, you want the lease to be for a minimum of 80 years or higher.
If it is less than that, you will need to consider the costs for extending or buying the lease outright.
You will also be required to pay ground rent to the individual or company who owns the land, which will increase your costs further.
It’s essential you clarify if the property is on lease or freehold so you can plan accordingly and decide whether the commercial space on offer is right for you or comes with too great a risk.
Need support with your commercial property purchase?
If you need support purchasing a commercial property, our team is here to help you. Our expert solicitors are here to advise and guide, allowing you to make the right decisions.
We can explain the legal complexities of a property purchase, answer all your questions and help you finalise the purchase by handling the finer details.
There is plenty to think about when buying or leasing commercial property, but having the right information helps you agree the best deal and take those steps to grow your business.
For advice and support on all commercial property matters, get in touch with us.
Related posts
