Business premises

As a niche commercial property practice Feldon Dunsmore Solicitors offer the full range of legal services for our clients in connection with business premises.

Here are just a few of the questions our clients ask for advice on:

Own or rent

Most small businesses will rent their premises on a commercial lease. This avoids tying up capital and is relatively more flexible although if the tenant does not take proper legal advice and negotiate the commercial terms this can involve significant expenses. One such example is where a tenant break clause contains conditions that are difficult to comply with or the landlord makes a large dilapidations claim at the end of the lease for items of disrepair that the tenant did not expect to be liable for because they were not made aware before signing the lease.

Purchasing commercial premises is still a good option if the opportunity arises and it is the right business decision. Ownership gives control that being a tenant under a lease is difficult to achieve and potentially will increase in value over time.

Purchase vehicle

An important decision is whether to purchase or rent business premises in personal names, via a limited company (existing company/SPV) or within a pension.

It is worth bearing in mind that any landlord will want to ensure that before accepting a limited company as tenant it has sufficient financial strength to pay the rent. If not then it is very likely that a rent deposit (commonly 3-6 months’ rent) will need to be lodged or the directors of the company will be asked to sign the lease as guarantors invoking personal liability for non-payment of rent and other breaches of the lease.

Owning a commercial property within a directors pension can be tax efficient and allows the trading company to take a lease of the business premises thereby paying a commercial rent to the pension but it is important to consider fully the other costs involved.

Funding

If funding is required then the facility agreement will set out the terms and conditions. Generally where a commercial property is being purchased by a limited company the lender will require a fixed legal charge (registered at Land Registry and Companies House), possibly a debenture and personal guarantees (PG). Where a PG is required we would always recommend that the liability is limited to a fixed amount plus interest and costs.

Planning

As part of our due diligence on a purchase or lease of business premises we would check the planning history with the local authority in order to advise on current use and any changes proposed that may require permission. This can easily be overlooked when putting in an offer for a property. Our planning team can provide our clients with detailed advice on this area. This would include reviewing conditions, existing Section 106 Agreements and any Community Infrastructure Levy liability.

Tax

This is one of the most complex areas when dealing with commercial property whether buying, selling or leasing. Every day we have to consider the implications of the following taxes for our clients:

• Stamp Duty Land Tax – surprisingly, this is payable on the VAT inclusive purchase price and tenants are also liable for payment of SDLT where the rent is sufficiently high
• VAT – has an ‘option to tax’ been made by the vendor?; can you look to take advantage of the TOGC rules?; is the transaction automatically standard rated? These are just some of the points that need to be investigated
• Capital allowances – a contract for sale and replies to pre contract enquiries will need to deal with any claims and specialist advice is generally required.
• Business rates – are any reliefs available? Might it be possible to take the premises out of the ratings list entirely if they are not capable of occupation?

Our clients other professional advisors (surveyor, accountant etc) will all play a significant part in guiding on the above matters and we pride ourselves on working closely with them throughout all transactions and to explore the best possible structure and any potential cost savings. The earlier we get involved the better.

We always charge our clients a fixed fee for sales, purchases and leases. These are linked to the level of rent/value of the property and complexity of the transaction. When giving a quote we always set out any other costs that need to be budgeted for. Our goal is to always do our best to meet any target date however close this may be. If it takes a telephone call to the other party’s solicitor or a round table meeting to help make the deal happen then that is what we will do.

We find a great deal of our clients come to us through recommendation and professional referral and we are proud of our network and strong reputation as specialist commercial property solicitors. The testimonials on this website speak for themselves in terms of the level of service and expert knowledge that we provide across the firm at Feldon Dunsmore.