HWB gives top tips for business leaders on making a success of commercial property
Businesses in the South looking to lease or buy commercial property should consider factors such as business rates, VAT and finding a good solicitor before taking the plunge, says leading property accountants HWB.
Arthur Bell, Director at South Coast accountants and tax advisers HWB, is offering an eight-point checklist for businesses who are looking to expand their property portfolio or venture into the world of commercial property for the first time.
It follows the latest business owners’ focus group, held at Eastleigh FC and organised by HWB, which saw leaders from across the region discuss the challenges of buying or leasing commercial property.
Arthur said: “Business owners have all manner of important decisions to make, but buying or leasing commercial property is one of the most impactful.
“It’s a critical step for any business, whether it’s part of a relocation, expansion or first-time investment, and it’s vital that decision-makers appreciate the potential pitfalls – and how to avoid them.
“There’s the long-running debate around whether to buy or lease commercial property and it’s important that businesses carefully review the advantages and disadvantages of each option. Smaller businesses often find leasing to be a more cost-effective and flexible route, but larger businesses with enough capital may see more long-term rewards in buying.
“Commercial property presents a whole gamut of additional factors to consider around taxes and compliance and I hope our guidelines are useful for business leaders in the South.”
HWB’s top tips are:
When you first collect the keys, take photographic evidence of the condition of the property so it can be referred to when you leave. Make sure you agree the dilapidations works while you are still in the property and can control the cost by using your own contractor to undertake the necessary work agreed.
- Lease clauses
Review these so that you know now if you can fit air conditioning or solar panels, or if indeed you can sublet if the space becomes too big for you.
Always consider break clauses and notice periods. It’s not always easy to know exactly where your business will be in five to 10 years’ time, but it is worth considering the notice period you’ll have a to give and negotiate a break clause so you have some flexibility should you need to move.
Do not fall foul of this tax. It’s best to understand what you should pay and when, and consider transfers of a going concern.
Carefully consider if the property should be owned:
- By you as an individual
- By the company or holding company
- By your SASS (Small Self Administered Scheme) pension scheme
- Via a SIPP (Self-invested Personal Scheme)
- Tenants Improvements
If you plan on making improvements to the property, ensure your insurance policy covers “Tenants Improvements” so in the event of a claim, the damage and repairs are covered.
- Find a solicitor with good property experience
If you’re buying or leasing a commercial property, getting all the legal paperwork in order at the start will ensure you save time when you exit the property.
- Business Rates Review
Having a review will make sure you are getting the best deal you can, and will allow for any contributing factors to be considered which may result in a reduction.
- ‘Cure’ Periods
William Scott-Moncrieff, Director at Ogilvy & Sneyd, advises: “Negotiating a reasonable ‘cure’ period is important, especially to you as the one renting a commercial property. A cure period refers to the time set aside to rectify any breaches in the contract. These breaches could be anything from placing a graphic sticker on a wall to forgetting paying rent on time. These cure periods mean that you’re somewhat protected because, without them, you could be subject to paying fines and penalties or even have legal action taken against you and your company. This is usually a standard part of a lease agreement, but making sure it’s there is imperative!”
HWB’s Business Owners Focus group meets every other month and is open to business owners from across Hampshire, Dorset, Wiltshire and West Sussex.
If you are a business owner and want to join like-minded individuals in an open discussion at the forum, please contact Vicky Holman on 023 8046 1200 or Vicky.email@example.com