A guide to selling and leasing commercial property
Published by Property Saviour
The UK's No.1 Fast House Sale Company
May 21, 2019 - Read time: 3 minutes
If you own a commercial property, you may be unsure about what to do with it. Should you lease it out to tenants, or put it on the market and sell up? Many property owners are unaware of the risks associated with leasing a commercial property, and the high fees associated with selling. In this guide, we’re going to guide you through everything you need to know about both leasing and selling, so you can make the most cost-effective decision and feel satisfied at the end of the process.
Selling a commercial property
If you don’t want the hassle of dealing with tenants, and you need a quick sale, selling your commercial property is probably the way forward for you.
Before you can market your property, it is important to understand what your buyers will be looking for. Their main considerations are likely to be location, suitability and property price. There are a lot of things to consider when weighing up the pros and cons of selling, including:
- Planning Permissions, Use Classes and lawful use certificates –
The zoning, or planning class, of your commercial property, will also be of interest to buyers. For instance, a commercial property that is classed as A1 in the UK will allow any future purchaser to open a shop, but extra permission needs to be sought if the buyer intends to use the property for a financial services business (A2 class required), restaurant (A3 required) or pub (A4 required).
- Commercial energy performance certificate (EPC) rating – if your property has a low EPC rating it may be difficult or even illegal to sell. Read more on this here.
- Details for business rates, stamp duty land tax and any other costs the buyer will be liable for
- Asbestos – If you’re trying to sell an outdated property, you’ll need to have asbestos survey carried out before hand. Read more here.
If this sounds like a lot of hassle, which it certainly can be, you should give us a call and let us guide you through our property buying process. We buy any property – and will take all the stress off your shoulders. If you’re property has asbestos or a low EPC rating, we will take the worry away and won’t leave you feeling uncertain about a sale.
How long will it take to sell a commercial property?
Selling commercial property successfully requires an up-to-date awareness of local property values, a careful understanding of the legislation surrounding commercial property sales as well as an understanding of what commercial property buyers are looking for from sellers.
Selling commercial property could take anything from a couple of weeks to a year or longer. Whether it’s an office or a warehouse, all selling timescales are directly affected by market elements such as the price of the property and local demand for a commercial property of your size and type.
Other more legislative factors that might impact the ability of the purchaser to run a business from your property will also impact the selling time; these factors include whether you are selling a freehold or leasehold property, local planning constraints that apply to commercial property of your type, as well as any issues with the title of the commercial property itself.
If you’re concerned your property will take a long time to sell, and don’t have time to wait, we offer a 10 day guaranteed sale with the cash going straight into your bank.
Commercial property selling fees
If you’re considering a traditional sale, commercial property can be complicated and you’ll need to hire a commercial agent.
Whilst selling with a commercial agent can take some of the hard work away, there’s going to be a lot of extra cost involved, and there’s no guarantee of a quick sale. There are a lot of other costs to take into consideration, too, including legal fees. Here are a few to be aware of:
- Commercial Agent Fees – commercial agents are in competition with each other, so it is worth discussing this with the agent before instructing them to sell your property. The agent receives a commission which is calculated as a percentage of the total commercial property sale price or lease value. This can be anywhere from 4% to 10% – taking a huge chunk from your cash fund.
- Solicitor fees – solicitors usually carry out conveyancing for a fixed fee. Costs for solicitors can be up to £1000, or even more if you are selling a large commercial property.
- Mortgage redemption fee – if you have a mortgage on your commercial property and you pay this off early, you may be liable to pay a redemption fee.
- Mortgage arrangement fees – if you cannot transfer your existing mortgage for any reason, you may be liable to pay mortgage arrangement fees for any new mortgage you require.
- Removal costs – if you have equipment, furniture or other assets in your commercial property and these are not part of the sale, you will need to arrange for these to be removed.
All in all, this can knock tens of thousands of pounds from your property value, meaning you’re going to walk away with less than you deserve. But selling your property through a commercial agent isn’t the only option.
Here at Property Saviour, we promise to buy your commercial property, pay the legal fees and clear the property free of charge. We’ll also promise to beat any cash offers and offer you the best price for your property. Find out more, here.
Should I lease my commercial property?
Leasing a commercial property
When you rent out a commercial property you must decide what you want to do and what you will allow the tenant to do so that you can consider which letting document is most appropriate.
It is important to use the correct document so that the tenant does not obtain rights in the property and so that you can easily remove the tenant if they do not pay the rent or breach any obligations in the agreement.
If the wrong type of document is used a tenant may obtain rights to remain at the property.
Leasing is complicated and if you get it wrong, you could end up in a sticky situation with your tenant, and losing out on a lot of cash.
It is important to instruct a solicitor to manage your contract, whether you are a landlord or a tenant, as a legal document is likely to be written using archaic and specialist terms. You’ll need to pay for a commercial lease specialist to guide you through this complex and daunting area of business, and as you can imagine – this isn’t cheap.
These specialist solicitors can charge £1000’s because of the complex issues that can arise with commercial property. It can also be time-consuming, taking months to work up a suitable lease ready for a tenant to sign.
How to find a tenant for a commercial property
When you do eventually get your property ready to lease out, you have to find a tenant. It’s much more difficult to find a tenant for commercial property than residential as it’s a niche market.
You could consider working with a commercial estate agents, but they’re going to take a cut of your profit, so bear that it mind. You could also consider Rightmove or Zoopla, if you have time. More often than not, commercial properties can be on the online market for up to a year if they aren’t in a desired location or aren’t in great condition.
Not everyone has time to wait, and if you don’t either, then get in touch with us. One of our expert advisors will guide you through our service and ensure you get the best and quickest deal.
Dealing with tenants
If you are lucky enough to find a tenant quickly, there’s no guarantee they’re going to make your life easier and give you the monthly earnings you desire.
The trouble with tenants is you can’t guarantee they’ll pay on time, and they can cause damage and chaos in your property.
Many landlords will consider hiring letting agents to deal with the day to day maintenance of their commercial property, but as always, there’s costs involved.
Average letting agent fees for landlords
Letting agent fees are payments that both landlords and tenants make to letting agents for the services they provide.
The amount charged and the services included differ from one letting agent to another, but typically landlords are paying the letting agent for things like tenant-finding, reference checks and property management.
The fees you pay will depend on the services you choose, and you may pay them as a flat fee or as a percentage of your rent.
Clearly, the amount you pay will depend on the level of service you are getting, but this is a rough guide to the letting agent fees paid by landlords:
- Finding a tenant and arranging referencing will typically attract a one-off fee, but this can be as high as one month’s rent.
- Rent collection will generally be charged as a percentage of the rent, and will generally be pegged at around five per cent.
- Full management is also a proportion of the rent, but this service can attract a fee of up to 15 per cent of the monthly sum.
Many landlords refuse to pay this, but as a result, end up feeling overwhelmed by the amount of work involved. If you don’t want this hassle, take a look at how we can help.
How can Property Saviour help you?
If you don’t want to pay a commercial agent to sell your property, and you don’t have time to wait then we could definitely help you out.
We buy properties for ourselves and we do not act for investors. That is why there are no contracts to sign..
We will exchange contracts within days not weeks, usually 5-10 days or less. You can decide when you want the sale to complete.
Understanding commercial property sales can be complex and daunting, but we want to change that for you and guide you through the best process. We charge you no fees. We offer free valuation. We will pay £500 towards your legal fees and give you a free Energy Performance Certificate worth at least £50. We also offer a free clearance service and will remove all unwanted items from your commercial property.
Make an enquiry now.