You will no doubt have a few questions about the advice and support our Commercial Property team offers as well as the processes involved before you decide to instruct your Solicitor.
We have captured some of the questions which we are frequently asked below. Remember all our teams also offer a free initial consultation.
Is VAT payable on commercial property?
Commercial property transactions are exempt from VAT, but the property owner has an option to elect to charge VAT on any future rental income or sale proceeds
Can I assign or transfer my lease to a new tenant?
It is standard practice for a lease to either prohibit assignments or make them conditional upon landlord’s consent being obtained. If landlord’s consent is required it cannot be unreasonably withheld or delayed, but the landlord may attach conditions to the assignment or transfer. It is important that a tenant obtains advice prior to entering into a lease or assignment of a lease, if they are unsure as to whether landlord’s consent is required and whether any conditions attached to that consent are enforceable.
What is the difference between freehold and leasehold property?
Freehold commercial property means as the property owner, you own the absolute title to the entire property and land on which it is built.
Leasehold is an interest in the land created by a lease, meaning you are a tenant who has the right to occupy the property for a fixed duration.
When purchasing a commercial property, is it necessary to have a survey?
Our advice is that as a purchaser, you should always have a survey to ensure the interest you are buying, or leasing is of the same value as purchase. A survey ensures that as a buyer, you are made aware of all the issues that affect the property, including hidden structural problems or any unseen costs. Failure to have a survey can mean that issues arise later after the purchase or lease has completed.
How is leasehold property acquired?
There are two ways of acquiring leasehold property:
You can be granted a new lease either by the property owner or by an existing tenant. Where the lease is granted by a tenant it is known as a sub-lease or underlease.
Alternately, you may take an assignment or transfer of an existing lease from the tenant (leases often allow tenants to transfer (or assign) their interest in the lease to a third party).
How long does a standard commercial property transaction take?
There is no standard period for completing a property transaction. This can vary enormously depending on the structure and complexity of the deal and the nature of the property. The seller/landlord will normally impose a timescale for carrying out due diligence, exchanging contracts and completing the transaction. As your legal advisors, we will need instructions as to the deadline and timescale that you wish to work towards.
What is a “full repairing and insuring lease”?
A full repairing and insuring lease contains tenants covenants for repairing and insuring the entirety of the property, this mean that as the tenant you will be responsible for fully insuring and repairing the property, including the structure elements such as the foundations, roof, external walls etc.
As a tenant, if you are required to sign a full repairing lease you should try to negotiate that at the end of the term of the lease you are not required to put the property into a better state than that which it was in when the lease was granted to you.
