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Small Business Premises

A business looking for premises to operate from might consider buying, leasing or even working from home. Tony Lake from Burnetts considers the pros and cons of each option.

A business looking for premises to operate from might consider buying, leasing or even working from home. Tony Lake from Burnetts considers the pros and cons of each option.

Buying

  • A big long term financial commitment as it ties up capital in order to fund the purchase price, the whole or part of which may have to be borrowed.
  • You are locked into property ownership.
  • Can be a good investment, although, as we have seen recently, property values can fall.

Lease Agreement

A lease gives you the right to occupy and use the property.  Points you should think about:

  • The length of time that you are committed to the lease.  Shorter is often preferred to give flexibility.  The downside is that there might not be any guarantee of the lease being renewed when it ends.
  • The amount of rent and how and when that is to be reviewed.
  • Is the lease personal to you?  If so, you could be prevented from selling your business or prevented from disposing of your premises when you no longer have a need for them.
  • Whether the lease allows your proposed use.
  • Whether you can carry out alterations to the property to suit your requirements.
  • The extent of your obligations to repair the property
  • Other charges that the lease requires you to pay, for example insurance premiums and service charges.

Working from Home

A room in your house might, for example be used as an office, or an outhouse might be used as a workshop.  Before you use your home, you will need to think about certain practicalities such as how this fits in with domestic arrangements, the availability of car parking and the reaction of neighbours.

Other Checks

Whether buying, leasing or using your home, some checks you should make:

  • The deeds of the property in case of a restrictive covenant preventing it being used for your business.
  • With your insurers, to see if you need to take out extra insurance.
  • Whether you will be charged business rates.
  • Tax consequences.  For example, in the case of your home, you may find yourself liable to Capital Gains Tax becoming payable that would otherwise not have been payable.
  • Whether you need planning permission.
  • Whether you need building regulation consent.
  • The need to carry out health and safety and fire risk assessments.
  • Whether you have sufficient disabled access.
  • Whether the mortgage lender of the property consents.

Leasing or using your home could make good business sense as it can free up cash otherwise used to fund a purchase and provide the flexibility to move to alternative premises as your business grows.

Tony Lake is a Partner in Burnetts’ Commercial Property team. To find out more about leasing or buying premises, contact Tony on 01228 552222 or visit www.burnetts.co.uk.

About the author

Published: Thursday 19th November 2009
Categorised: Commercial Property

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