When you buy business premises instead of leasing, you immediately have some superior advantages that can help secure your company. As a small business, this can be a massive lifeline and helps avoid some of the most common pitfalls of renting a business unit. But what are these benefits, and how can they change your business for the better? From avoiding unfair rental increases to access to equity release for secure funding, here are some examples.
Renting premises is a genuinely solid way to stay in business and comes with its own advantages, such as reduced responsibility. However, business owners are exploring ownership of premises through specialist commercial mortgages that offer some flexibility. As such, you can build equity in a property which renting doesn’t allow you to do. In the long term, the business unit can become more valuable than when you purchased it, resulting in profit.
In the UK, it is common for business rent to increase every 3 to 5 years, which isn’t very long, and can be damaging to a small, struggling company. However, as a unit owner, you have many advantages when it comes to costs, one of which is avoiding rent increases for the premises:
Operating costs are always concerning, especially today with energy and fuel prices. However, when you own a business unit instead of renting, there is an immediate reduction in the costs of doing business. A locked-in mortgage cost makes it much easier to forecast costs, as there are no nasty hidden expenses that can occur when you lease a business premises. As such, the business runs much more smoothly from a financial perspective without rental volatility.
You may not be aware that there are actually tax advantages to owning your business space over renting from a landlord. For example, any interest payments made on a commercial mortgage could be eligible as a tax deduction. As such, the overall tax bill for the business can be greatly reduced, resulting in greater financial freedom, forecasting and predictability. However, you can also access capital allowances when you make improvements to the unit.
Commercial space in the UK accounts for 13% of the total value of buildings across the country, including office, retail and industrial space. When you need to give your business a financial makeover, it can be better to explore commercial space purchasing rather than leasing, especially for long-term wealth. However, you also have a lot more control as a space owner.
You cannot make any changes to a building when you rent because you aren’t the owner. As the owner, however, you are free to amend the unit and add or remove space as you need.
When you rent a space, it often comes decorated to be used as-is. However, the dynamic nature of office space means this becomes outdated, and as an owner, you can make changes.
Many office units come with appointed extra services such as cleaners, security and utility supply, some of which may not suit your business, and as an owner, you can change these.
Owning a business unit gives you full control over everything that happens and how you can change it. This allows for greater customisation at every level that suits your business perfectly, rather than making compromises, even on much-needed internal services such as cleaning.
One of the greatest benefits of owning a business unit is that you can open it up for additional revenue streams. As an owner, you can do pretty much what you like with the property and allow how you want into it. Unlike renting, you can legally sublet your business unit and make some extra cash from it. This is a popular option for business premises that are too large for one company, and the extra space can be used for another business while generating income.
Property is one of the most popular tangible assets that people love to invest in because it almost always increases in value. This means you have something valuable to pass on to your successors, such as children, spouses or business partners. However, you can also consider selling a commercial space to another company, which can be a very lucrative way to generate immediate money for a stable and stressless retirement when the time eventually comes.
Data from many surveys suggests that a staggering 82% of small UK businesses face cash flow problems at some point, and over 50,000 per year close because of this. However, if you own a business unit, you can release equity to help get your company through when times are bad:
Leasing a business unit often comes with specific clauses, and one of the most common is a reinstatement obligation. This usually requires the tenant to restore the space to its original state when leaving, and is one of the more expensive things to do when your commercial lease runs out. However, you have no such obligation when you own the building. Unless specifically agreed upon when selling a unit, there is no need to spend additional money on repairs.
Building long-term business wealth through equity is one of the best reasons to buy business premises rather than leasing. However, you also have full control over how the space is amended and renovated, and there are no obligatory reinstatement costs when selling.
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