There are many things to consider when purchasing a commercial property, so doing careful research seems obvious.
Examine the suitability of the location, any potential developments which could affect your investment, and transport infrastructure for customers and staff.
But don’t forget to check other important areas where hidden costs can upset the best plans. These could include:
Stamp Duty Land Tax
If you buy a commercial property worth £150,000 or more, you will have to pay Stamp Duty Land Tax (Stamp Duty).
From £150,000-£250,000, you will be levied two per cent in duty and for a property above £250,000, you will be charged a further five per cent on the remainder of its value. To work out the amount, you can use the Stamp Duty Land Tax calculator on GOV.UK.
This applies to England and Northern Ireland, separate arrangements are in place in Wales and Scotland.
Business rates
Business rates are a tax on most commercial properties in England and Wales and are paid by the occupier of the property.
The rateable value of the property determines how much you will need to pay in business rates. This is based on an estimate by the Valuation Office Agency (VOA) of your property’s open market rental value.
Factors that could affect this could be the size and type of business or any machinery or equipment on the premises.
Having a higher rateable value means that you’ll pay more in business rates. A ‘multiplier’ is used to calculate your business rates and this value is set by the Government each year in line with inflation.
Change of use
A major cost could occur should you wish to change the purpose of use for premises, for instance, turning an old theatre into a pub or restaurant, or a shop into a post office. Generally, if it is proposed to change from one Use Class to another, you will need planning permission from the local authority. It is also likely that external building work associated with a change of use will also require planning permission.
However, planning permission will not be needed if your existing and proposed future use falls within the same class or range of classes. Also, certain changes of use are permitted without applying for permission.
Maintenance
Budgeting should also include ongoing costs like:
· Repairs and maintenance
· Utility bills
· Service charges, such as waste collection.
Need help with purchasing commercial property? Contact us today.