The right property for your business
Read time: 8 mins Date added: 21/11/2023
This guide will take you through the process of finding a property that fits your business, from buying versus leasing to the legal essentials.
Freehold
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The positives |
The negatives |
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The positives The building is yours to use as you see fit within the law. |
The negatives As a start-up business, it may not be easy to get a commercial mortgage - you could have to find a substantial deposit to secure one. |
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The positives You have long-term stability whereas a landlord may decide to sell the property and request your exit on the lease renewal date. |
The negatives You’ll need to make enough profit to keep up your repayments, even if interest rates rise, so it can be a financial risk. |
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The positives Adapting your premises to suit your business does not need permission from a landlord. |
The negatives Commercial properties for rent are more widely available than properties for sale so your choice may be limited. |
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The positives You have the flexibility to expand in the future if your space allows. |
The negatives You are responsible for the up-keep of the property and these costs could easily escalate if you need significant repairs such as a new roof. |
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The positives You can make use of any unused space by subletting. |
The negatives |
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The positives Your property is an asset which will rise in value in a positive market. |
The negatives |
Leasehold
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The positives |
The negatives |
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The positives May need minimal capital outlay at the start. |
The negatives There will be limitations on making alterations or to sub-letting any spare space. |
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The positives A smaller financial risk than freehold. |
The negatives Negotiating your lease can be complicated. |
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The positives A lease is commonly renewable so you can usually stay on (unless you breach your contract or the landlord wants to take back the building). |
The negatives There can be penalties and contingency charges as part of a lease that can use up your capital when you may need it most. |
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The positives Often significant repairs on the property are the responsibility of the landlord. |
The negatives You may not have a choice on utility suppliers so you can’t negotiate the best rates for these costs. |
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The positives With competition for rental properties you may be offered incentives such as rent free periods. |
The negatives You could be liable for repair costs on exiting the property. |
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The positives If your chosen location doesn’t work out you have the option to move at the end of the lease. |
The negatives You don’t gain from the increasing value of the property in the long term. |