Moving your business to a new commercial property can be stressful. Not only do you have to find the right size and location, but you have to decide whether it’s better to rent commercial property or buy one.
This will depend largely on what stage your business is at, and what you want to achieve – both in the short and long terms – but there are benefits to both. One of the key differences is how long it takes to finish the process, with renting commercial property and buying a commercial property both having various steps to complete.
The big question many people ask our experts at Williams Sillitoe, though, is which is the faster process. With commercial property in Manchester in great demand, our experts looked at which process is likely to be completed faster so you can make the best decision.
Renting A Commercial Property
Renting a commercial property isn’t as simple as signing on the dotted line and moving in. There are several steps involved, which can take time to complete. Anything that needs to be investigated further or negotiated can also slow things down considerably.
That said, the first thing to do is identify where you want your business to be located and search for commercial properties in that area or nearby. Once you have found one you want to move forward with, it’s essential to view the property in person so you can get a real feel for it and make sure it’s fit for purpose. Then you can progress to the next steps.
Setting Out The Terms
Once a property has been identified and contact made, the first thing to do is set out the Head Of Terms. This is non-binding, but suggests what will happen should the process move forward, unless anything arises that requires changes. This includes details such as length, rent, VAT, guarantors and more.
Once this is done, solicitors are instructed to move forward.
Agreeing Contract Terms
The solicitors will request documents to ascertain the status of the commercial property you want to rent, how you plan to use it and if any work is needed to make the space suitable for your needs. In some cases, such as offices, this might be a much simpler conversation.
From the terms set out originally, the full terms of the lease can be drawn up for both parties to review.
Completing Due Diligence
At this stage, thorough checks will be done to make sure the commercial property is suitable for your needs. These searches can take time, but if you’re entering a long term contract, it is useful to know as much about the property as possible, especially if you will be responsible for certain aspects of it.
Once due diligence and searches are complete, and any queries resolved, the lease will be finalised. This is where aspects can be negotiated depending on what has been found and what will suit both parties best. This can also add time to the process.
Once everything is done, agreed, and signed, you can get on with moving in on the agreed date.
Buying A Commercial Property
Compared to renting, buying a commercial property is seen as a much bigger investment. You are making the decision to base yourself in a specific location for the foreseeable future, and you will be responsible for everything to do with that property.
Once you have found a property you think you’d like to buy, it’s again essential to arrange a viewing. This can reveal more than pictures or videos tours. It’s a big commitment and it has to be perfect for what you need now and what you want to do with it in the future. If it meets your needs and expectations, you can put an offer in – much like buying a residential property. Once agreed, you can begin the process.
Drafting Head Of Terms
Much like with renting a commercial property, the first step is to draft the Head of Terms. This isn’t legally binding, but if everything proceeds as expected, they will form the basis of the contract later in the process. That’s why it’s important to get these right early on.
The next step involves appointing solicitors and they will liaise over the Head of Terms and exchange the initial documents relating to the property, such as drafted sale contracts, title documents, EPC certificates, and much more. They will also conduct general property enquiries.
Carrying Out Due Diligence
Once these documents have been received and reviewed, your solicitor will begin the necessary due diligence on the property. This involves more searches, checking finances, and assessing whether the property is suitable for its intended use. Property valuations or surveys may also be needed at this stage. Mortgages will also be checked, to ensure the sale won’t fall through.
This can be the longest stage of buying a commercial property.
Contracts Agreed And Exchanged
Once the due diligence is finished, and assuming there are no complications, the contracts can be drafted – based on the Head Of Terms – and these will be reviewed by both parties.
To progress, you will be asked to sign the documents and transfer the agreed deposit so the contracts can be exchanged. Once contracts are exchanged, they become legally binding for both sides.
Pre-completion searches are carried out with the Land Registry. The final funds from you or your lender will be sent to the seller and property transfers to you. You can now collect the keys and move into the property.
Is It Faster To Buy Or Rent Commercial Property?
In most cases, renting a commercial property will take around six to eight weeks, which will be faster than buying a commercial property.
The draft terms, negotiations and due diligence is often quicker when renting commercial property as there is less to cover. There are less documents to complete compared to buying, too.
With no complications, and experienced sellers, solicitors, and agents, the whole process can run smoothly and quickly, potentially shortening the time in some cases. However, parts relying on a third party are outside of everyone’s control.
There are some cases where buying a commercial property will be faster. If there’s no chain, for example, you might find it a faster process to complete – although you want to match up the dates as closely as possible so you’re not paying for two properties for a long period of time.
Speak To An Expert To Find Out More About Renting Commercial Property
We know that renting or buying a commercial property is a big decision, and will have a lasting effect on your business, which is why you need to get it right. The option you choose needs to reflect what you want to achieve both now and in the future, and it can help to get some advice from people who understand the factors you’re weighing up.
To find out more about commercial property for rent in Manchester, or to see what properties are available for you to choose from, get in touch with the team at Williams Sillitoe today. We’ll work with you to understand your situation and what you’re looking to find, so we can share the best options on the market.