There are some similarities between selling a commercial property and a residential one, but you’ll need to consider a few more additional matters, and there are more variables to take into account. Furthermore, the procedure is somewhat different and will usually take longer.
Preparation To Sell
When you’re preparing to sell your commercial property, you need to maximise its legal and visual “kerb appeal”. Decluttering is important, and you need to address essential cosmetic issues and repairs. Potential purchasers have to be able to see themselves running their own business from your premises.
When you sell a commercial property, your buyer might want to occupy your property themselves. Should you have commercial tenants already in occupation, it’s possible you’ll have to think about issues like serving them notice, dilapidations, and break clauses. You’ll also need to find out whether your tenant has tenure security under the 1954 Landlord & Tenant Act.
Valuing Your Property
Valuing a commercial property will always be more complex than valuing a residential one as there are a number of factors that are taken into account. Whether you’re opting for market appraisal or RICS valuation, the value depends on the building, its location, condition, the advice that you receive, and your own personal choice.
Information Pack For The Buyer
When selling your commercial property, you need to know the information that potential buyers will need to know. Although it isn’t essential to put an information pack together for the buyer, it’s a sensible idea as they’ll then have all they need for decision making in a single location. Some items to put in the pack include:
- Land Registry documents and property deeds
- Paperwork regarding building regulations, planning permissions, lawful use certification, and use classes.
- Asbestos survey for properties constructed before 2000
- Information about business rates
- CPSE replies
- Maintenance records, Fire Risk Assessments and Health & Safety records
- VAT registration documentation
- Information about capital allowances
Costs Of Selling
You need to be aware of the costs involved with the sale of your commercial property and to budget properly for them. They include:
- Surveyor fees for appraisals, valuations and surveys
- Commercial agent fees
- Solicitor fees
- Third-party fees
- Mortgage redemption fee
- Capital Gains Tax (CGT)
- Removal costs
Heads of Terms
After accepting a buyer’s offer, your agent will produce a Heads of Terms. This will stipulate key clauses while providing a route towards completing due diligence. Although Heads of Terms aren’t compulsory, they’re highly recommended.
Your buyer will mostly manage all the due diligence process. They’ll probably want to do a survey and they’ll probably have other enquiries. Although commercial property sales are primarily subject to “buyer beware” or “caveat emptor”, you’re still required to give accurate, detailed, and prompt replies to enquiries raised by the buyer.
Contract Exchange And Completion
Once due diligence is completed, your solicitor requests and accepts the buyer’s deposit for you and arranges for exchange of contracts. On the completion day, once the purchase monies have been received, the transfer documentation is dated and the keys will be released to your property’s new owner.