The following provides answers to some of the questions most frequently asked by prospective buyers and tenants of commercial premises/businesses.
How do I search or find out more information about a property or business?
You can search for suitable premises and register your requirements on our website or contact our Commercial Department and we can send out particulars. If you have any further questions you can email or phone us and we will be pleased to help or endeavour to find out the answer.
How do I arrange to view a property and what information will I need to provide?
Contact our office and arrangements can be made to view at a mutually convenient time. In most cases our client will show you round. Before you view a property you will need to provide your full details including your address and telephone number. We will contact you after a viewing for any feedback and comments about the property.
What should I do if I will want to use the property for a different purpose than its existing use?
If in doubt about your proposed use of the property, you are strongly advised to contact the planning department at the local authority regarding all necessary consents and licences required. Some of the main planning use classes for commercial properties are as follows: A1 Shops; A2 Financial and professional services; A3 Restaurants and Cafes; A4 Drink Establishments; A5 Hot Food Takeaway; B1 Business (light industrial & office); B2 General Industrial; B8 Storage and distribution; C1 Hotels and Hostels and D1 Non residential institutions.
What are the main outgoings for a property?
Other than rent and mortgage, the main property outgoings will be rates, insurance, utilities and, in shared buildings, there may be a service charge for the upkeep of common areas.
Is the rateable value the amount I will pay for business rates?
No. The rates payable is a multiple of the national rate in the £ (0.433 or 0.426 in 2011/12) and the rateable value and then adjusted for any transitional, small business, charitable and other reliefs. The rates payable can vary according to the specific occupier and reliefs and therefore we do not always quote rates payable in particulars. For further details contact the local rating authority.
How much stamp duty will I pay on completion of a purchase or lease?
Stamp duty is payable when you purchase a property as a percentage of the purchase price as follows:
Up to £150,000 Nil
£150,000-£250,000 1% on total
£250,001 - £500,000 3% on total
over £500,000 4% on total
Stamp duty is not payable on fixtures and fittings, where they form part of the price agreed, but is payable on goodwill where it is deemed to be tied to the property.
When leasing a property Stamp duty is only payable where the total net present value of the rent exceeds £150,000, at 1% on total, on a lease of 7 years or more.
(rates applicable at May 2011)
Will I pay VAT on the purchase price or rent?
Maybe. VAT is payable on the rent or purchase price of a commercial property only if the current or previous owners have elected to waive the general exemption of property and have 'opted to tax'. This only applies in certain circumstance and VAT is not payable on most sales and leases but if in doubt we can check the current position. If you are VAT registered, you can, of course, recover the VAT. This is nothing to do with whether a business is VAT registered.
Will I be able to see the trading accounts of a business I am interested in?
Yes. However, vendors of businesses will normally only allow their accounts to be seen by bona fide applicants who they have met during a viewing. We can provide accounts after a viewing but only before if the vendor has given specific approval.
What should I look for in the trading accounts?
It is recommended that you consult with your accountant or financial adviser. Most profit and loss accounts will show three main figures; Sales or Turnover; Gross Profit (Sales less Cost of Sales) and Net Profit (Gross Profit less Overheads). Consider whether each part of the figures could be changed by running the business differently - number of staff, opening times etc. Overheads also normally include finance and depreciation. Finance is specific to the particular owner of the business and depreciation is a non cash item. See what the figures look like without these deductions.
Who should I speak to about a loan or mortgage?
Most high street banks and building societies can provide advice on finance or you should contact a financial adviser. We can put you in touch with various contacts locally. Most lenders will require a business plan and cash flow forecasts for business loans.
What should I do and what information should I provide if I wish to make an offer to buy a business or property?
Offers can be made verbally or in writing to our office and all offers will be reported to our client unless we have been specifically instructed not to report offers below a certain level. Proof of identity and confirmation that finance is available will be required and, in particular, whether the purchase is dependent on another sale and what stage that sale has reached. When we have instructions from the vendor you will be contacted again.
What happens if there are other offers?
If there is more than one party making offers to buy a property or business, the vendor may decide to ask for best and final offers or continue to receive offers until all other parties have dropped out. We will discuss these procedures with the vendors and they will instruct us on how they wish to proceed. It is for the vendors to decide to whom they eventually sell a property.
What should I do and what information should I provide if I wish to rent a property available to let?
We will provide an application form if you are interested in letting a property. Landlords will usually consider applications based on the impact of the proposed use on the property and other tenants and the financial standing of the proposed tenant and not necessarily on the amount of rent a tenant is prepared to offer. A bank and two trade or personal references will normally be requested and sometimes landlords will ask to see copies of previous trading accounts, meet the prospective tenants and request other information.
What happens next?
Once a sale or letting has been agreed a memorandum of sale or heads of terms notification detailing the parties, their solicitors and the terms agreed will be circulated by us to all parties and their solicitors.
What should I be doing after a sale or letting has been agreed?
You should instruct your solicitors promptly at this stage and contact your lender. Your lender will probably require a valuation of the property and you may also wish to arrange for a building survey to be carried out. It is advisable that you arrange for any surveys to be carried out at an early stage after an agreement has been reached to avoid any delays later on. You should keep in touch with your solicitor during the sale/letting.
How is the agreed price split between the property, fixtures and fittings and goodwill?
In the sale of a business and some other sales, the parties will agree an overall price and then a split of the price between the property, goodwill and fixtures and fittings. There are various tax implications and the vendor's accountant will normally propose a split which can be agreed upon. Any split will also need to be acceptable to the Inland Revenue.
What happens when I buy a business where the property is held on a lease?
The price will be for the business only and the existing lease will be transferred (assigned) to you. The landlord may require references or other information before giving consent to the assignment of the lease. You will then take on all the obligations including the rent payable of the existing lease. If the existing lease has expired or there is no lease in place, terms will have to be agreed with the landlord for a new lease.
What does SAV mean?
Stock at Valuation. In a business sale, the parties will have to agree the value of the consumable/disposable stock on the day of completion and a sum in addition to the agreed price is paid over for the stock. Stocktakers are sometimes employed for this purpose.
What happens on exchange of contracts?
When exchange of contracts takes place both parties are irrevocably committed and the purchaser pays a deposit (usually 10% of the agreed sale price). However, keys will not be handed over until the sale or letting has completed.
What happens on completion?
On completion of a sale the balance of the money is transferred to the vendor and the purchaser takes possession of the property. On completion of a letting the first tranche of rent is paid and the tenant takes possession.
When are PF&K's offices open?
Our normal office opening hours are 9.00 am to 5.00 pm Monday to Friday. However, our Estate Agency offices are also open to take inquiries and arrange viewings on Saturdays from 9.00 am to 12 noon (3.00 pm in Summer). Our Estate Agency offices are in Penrith, Keswick, Appleby, Cockermouth and Kirkby Stephen. The Commercial Department is based in Penrith. Our staff are here to help and are able to assist with basic inquiries including taking applicant details, sending out particulars, arranging viewings, taking and reporting offers.
For further information please contact us as follows:
PF&K Commercial
Devonshire Chambers
Devonshire St
Penrith CA11 7SS
Tel: 01768 862135
Fax: 01768 892101
Email: commercial@pfandk.co.uk