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Commercial Property |
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Commercial Property: Pros and ConsLondon has a wealth of commercial property. It is one of the world’s leading commercial centres and the development of commercial business sites continues to grow. However, while the choice may be large and varied, anyone wanting to become involved in the world of commercial property, whether as an investor, occupier, or leaseholder, needs to be aware of the pros and cons of this particular property market. If you own a business and want to rent a commercial property then you shouldn’t have too much of a problem finding a premises in central London. However, before committing yourself to renting a commercial property you should understand what’s involved. Finding suitable premises can be time-consuming and can take up valuable resources that you could be putting into growing your business. You can, however, instruct a Chartered Surveyor or commercial agent to do this on your behalf. One professional you won’t have any choice in instructing is a solicitor experienced in the field; this will be essential to check all aspects of the lease or title. In addition, a Cchartered Ssurveyor can advise on the best commercial property deal to suit your business needs. All this expert advice won’t come free, of course, but it could save you a lot in the long run. When it comes to committing yourself to renting a commercial property, there are a number of factors that could be considered disadvantageous: the property will be subject to rent increases; you could be responsible for repairs to the property; your landlord could fail to keep the property cleaned and maintained, failing to fulfil their side of the agreement; and there could be restrictions governing any alterations to the property which could prevent you from adapting it to suit your growing business. One obvious disadvantage to renting is that as with renting a residential property, as a tenant you, you building an equity in the property. However, buying a commercial property is an expensive business and the down-payment necessary to acquire the building you want could have a detrimental effect on your cash flow, and prevent you from pursuing other opportunities that could help grow and expand your business. There’s also the responsibility to consider:, as the owner of the building, you are responsible for the upkeep and maintenance of the property which could prove to be costly. And don’t forget that while you will have invested in an asset that you or your business will eventually own outright, if the state of the economy is not advantageous, the equity in the property may not yield the return you expect it to. While buying a commercial property might leave your investment open to the vagaries of the economy, the trend in commercial property prices in central London is usually upwards, so it’s unlikely that in time you will fail to build any equity should you buy the premises on which you carry out your business. For some business owners, the complete control that comes with buying their own business property is equally important. You don’t have to get permission from a landlord if you want to make any alterations to the building space (nor will you be at risk of having to pay for the space to be returned to its original state when you move out). Some investors choose to buy commercial property as an investment. And as an investor in the commercial property sector, there are a number of tax advantages not available to residential property investors, including capital allowances, and the possibility of using pension funds for investment. A popular advantage is investing in commercial property through a Self-Invested Personal Person Scheme (SIPP): income and gains within the SIPP are tax-free and the investor can obtain tax relief for payments made into the SIPP, for example to use as a deposit on a new commercial property.
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