Buying A Commercial Property In The United Kingdom
What can go wrong, and what do you need to be careful of?
POSTED BY JONATHAN VOWLES ON 04/09/2018 @ 8:00AM
Whether you are buying to rent out as an investor or buying for your own business, buying a commercial property can be a fantastic asset, which makes it all the more important to get the purchase right ...
Buying a commercial property needn't be complicated. Just ask JVCA!
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There are many things that can go wrong, and you really do have to be careful how you do it. Here are five things you need to know about when buying a commercial property:
Who is going to buy it?
So, you have decided to buy a building, but should you purchase it in your personal name, using a new limited company, your pension fund or your existing business? There are pros and cons of each one and your own circumstances will have a huge bearing on the right answer.
Quite often, but not always, VAT is charged when buying commercial property. How can you make that work to your advantage or, if the circumstances are right, how can you avoid paying VAT in the first place? What does this mean for charging rents to others? VAT and property can be complex.
If your rental yield is 8% and you can get an interest rate of 3%, why wouldn't you borrow? Perhaps you need to borrow to complete the purchase? Maybe you can borrow from your business or your pension fund?
Quite often, there are significant advantages to be gained from paying attention to the capital allowances situation when purchasing (or selling) a commercial building. The fixed plant and equipment in or attached to the building is sold with the building.
But for tax purposes, it means you are buying two things, a building and that equipment. HMRC will give tax relief for the equipment against the rental profits. This is a specialist area and not all solicitors or accountants have the necessary skills to help.
Your solicitor will carry out some checks, but before buying a commercial property, you need to carry out your own research to make sure you are buying something with long-term value and not just buying somebody else's problems.
If you have tenants, then are they quality tenants? If the building has lots of facilities, then what is the repair schedule and costing? If it has development potential, then what is the likelihood of getting planning permission?
At JVCA We can help review your circumstances and the viability of your proposition. And we'll make it easy for you by introducing you to potential lenders or brokers. We can help you to choose the right ownership path, take care of the VAT, help you with the funding and the capital allowances ... and a lot more.
"Would you like to know more?"
If you are thinking of buying a commercial property and would like some great advice, then do give me a call on 01234 752 566 or click here to ping me an email and let's see how I can help you.
Until next time ...
If you're looking for a new accountant to help grow your business, do visit www.jvca.co.uk and discover how Jonathan Vowles Chartered Accountants can help you!
I've been an accountant in and for business since 1987 and have a wide experience of consultancy, audit, accounts, taxation and wealth planning work from individuals and small businesses to multinational corporations and charities.
My eclectic interests in growing and developing business span a number of areas … and can be summarised as strategic business advice and tax saving advice.
I have worked with the Chamber of Commerce to deliver courses for people about starting up in business and have lectured about tax for a major accountancy practice and for Milton Keynes College.
I relax by reading fiction and by getting away from the office in a campervan.