1. Do not underestimate the task
The property from which you run your business is fundamental to the success of your business. Whether you are buying or leasing the space that you operate from it is likely to have a significant impact on your business, so getting it right is important.
2. Get the right team together
Knowing your own business is likely to be crucial to its success. Working on what you know is likely to reap the best rewards. Recognising that your time will be best spent on the business you know and appointing the right team to help you make the important decisions can reduce the risk of getting things wrong and will allow you to focus on your own business.
Engaging the right professionals early will often provide better value. There will be many things that will need to be considered that will impact on the area of another’s experience and expertise.
The right team will depend upon whether your move involves just a purchase or taking a lease or involves both selling and signing a lease as well. Those that can help include:
- your commercial property agent;
- your bank manager / financier;
- your accountant; and
- your solicitor.
3. Have a plan
With the help of your professional team you can formulate a plan. This will help achieve the least amount of disruption to your own business, which is often a cost which is not taken into account when embarking on this type of project, and will need to be factored into your business plan.
Your business plan and your financial circumstances will determine whether you should be considering purchasing a freehold property or taking a lease and there are a number of factors, not all of which are financial that will need to be considered, some of which are:
- can I purchase the property through my pension fund, take advantage of the tax benefits and lease the property to my business;
- will I have to provide the Landlord a Rent Deposit as security for the performance of the provisions of the Lease;
- how quickly can I move in, and will having to get the Landlord’s Consent (or even Superior the Landlord’s Consent) in respect of a leasehold property affect the timing;
- what is the state and condition of the Property, will I need to or be liable to carry out work to the Property, either now or at some time in the future to meet new regulations (the Energy Act 2011 regulations which come into force in April 2018) and what will this cost;
- what are the best terms I can get for purchasing or leasing the Property and what is available; and
- do I want to have to go to a Landlord for Consents to change anything or alter the Property.
4. Know the process
This should not be a secret to you and should be something that your professional team should share with you. This need not be an in-depth knowledge, but an overview, so you know who does what, how the professional team can interact to get the most out of the advice and assistance you are given and to help you plan the project.
The commercial agent
Should be able to help you source the right property that meets your brief and advise you on the best terms available in the market. Remember you are not necessarily an expert on negotiating the various terms (as it is not just about rent) and your time can be best spent on your own business.
The Agent will be able to arrange for surveys and advise on the condition of the Property, so that you do not discover at a later date an unbudgeted cost.
The bank manager / financier
Inevitably there will be a cost in this exercise and it will impact on your business and keeping those who will need to fund the venture “in the loop”, would be essential, in particular if you are relying on “debt” to fund the acquisition. If you are relying on debt then often the lender will require security in the form of a mortgage and that will require a valuation and this is something that you could link back to the right commercial agent to deal with.
Those funding will also be interested in your business plan.
You may well have consulted your accountant with regard to your business plan and will no doubt have “run the figures” by your accountant to advice on the tax-efficient way of structuring and proceeding with a project of this nature. Often there are VAT implications and if you plan on carrying out work there may be Capital Allowance tax advice that you will need to take.
Will need to coordinate and gather the information from the other professionals and to project manage the legal process. The process and documentation will be different depending on whether you are purchasing a freehold or taking a new lease or taking an assignment of an existing lease. Often the legal aspects of the documentation have financial implications and the potential liabilities will need to be highlighted so contingencies can be provided for or better terms negotiated.
There is now a new form of lease “the Model Commercial Lease”, that is aimed to become a familiar starting point for commercial letting transactions and therefore speed up the process, as it is intended to avoid much of the unnecessary negotiations on most routine letting transactions, which should enable your solicitor to provide a fixed fee for dealing with the legal aspects.
You may also need to take advice on employment issues that may arise if you are acquiring premises where a similar business to yours previously occupied the property (TUPE issues) or you are relocating a business which affects your existing employees.
Therefore, if you are contemplating moving your business it would be advisable to contact your “project manager solicitor”, who should specialise in commercial property transactions and will be able to assist you in coordinating or putting together your professional team for such an important project in order to minimise any adverse impact on your business move.