UK Commercial Property Investment
Ayana Properties provides acquisition and investment advice to our clients in their transactions. Our seasoned advisors offer first class tailored advice whilst leveraging our companies regional and global network. Providing a fully integrated service spanning advisory, investment sales and acquisitions we have a track record of outperforming our clients expectations.
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UK: +44 20 8133 1498 Dubai: +971 56 177 3140Frequently Asked Questions
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What is Commercial Property Investment?
A commercial property is real estate property that is engaged in business activities. It may refer to buildings or land intended to generate a profit, either from capital gain or rental income. Commercial property may include office buildings, medical centers, hotels, malls, retail stores, cinemas and entertainment facilities.
Why Invest in commercial property?
Commercial property in UK traditionally offers high yields and low risk.Request information
Why Choose Ayana Properties?
Our team will assist in acquiring and disposing of income-producing properties and negotiating commercial terms on our clients behalf. We assist our investors through A-Z of the deal process, assisting with legal, accounting and finance issues to ensure the best outcomes.
We understand all requirements are different and unique. So we take time to understand and source the most suitable assets. We cover branded and independent hotels as well as serviced apartments and blue chip assets. Our team work on a daily basis with sector experts giving investors updated market intelligence and transaction opportunities leading to the brokerage of successful confidential sales.
Through our extensive networks and far reaching marketing capabilities we are able to reach a variety of investors and sellers alike always offering impartial advice. Ayana Properties owes its success to a sound network of partnerships with a range of leading service providers and financial institutions as well as its in-house team of highly specialized professionals with extensive market experience and technical knowledge.
Ayana Properties will always engage with the highest standard of confidentiality and discretion.
What Our Clients Say About Ayana Properties
Ayana Properties is very well reputed throughout the Middle East for building relationships and delivering. Partnering with groups in the region and supporting their investment acquisition efforts, our selection criteria is very stringent and each group is reviewed for clear and precise information on strategy, appetite, terms and conditions, and income/return requirements from the very beginning of the due diligence process.
Frequently Asked Questions by Our Clients
How do I buy Commercial Property in the UK?
Before purchasing, it is advisable to look at the trends in the local and national commercial property market, such as:
- Value of commercial property
- Supply of commercial property
- Availability of commercial mortgages
- Appetite of competing investors
- Tenant demand and rental values
- Location and building type
- Type of investment, whether leasehold or freehold
It is a good idea to find out about how the commercial property will suit business needs, whether it is yours or a tenant’s:
- Transport: air, sea, rail and road links
- Parking facilities and restrictions
- Delivery facilities and restrictions
- Congestion charges
- Local amenities for staff
- Proximity to pool of potential employees, including colleges and universities
- Closeness to other businesses, suppliers or clients
- Facilities, equipment, furniture and other services
- Space configuration
- Impression it will give to potential employees and clients
Commercial property is divided into use classes under the Town and Country Planning (Uses Classes) Order 1987. The legislation determines how each commercial property is occupied. Make sure that any business carried out in the commercial property you plan to buy is in line with its planning use.
If you plan to redevelop the building or alter its intended use, you may require planning permission.
However, there are exceptions to the rule where legislation allows some changes between use without full consent.
It is important that you always seek advice from the local council and a commercial estate agent on the feasibility.
Is commercial property a good investment in UK?
The UK has always used a longer lease structure for its commercial property than many countries throughout the world, and this is very beneficial to investors as it provides much more security over a longer term.
While commercial lease terms have tended to fall from the 25 year norm of previous years, leases in the UK are now around eight years, meaning that investors can expect an extended regular monthly income.
Due to the nature of commercial buildings, their size and potential, investors can usually expect higher rental returns than typical residential properties.There is also the additional benefit of capital growth in the value of the property itself.
Many property investment specialists argue that commercial property investment provides an income that other indirect investment asset classes struggle to yield.
Direct ownership of commercial property is a tangible asset that can be modified, renovated, redeveloped and reviewed as the market changes, giving investors better control over how to respond to shifting trends and occupier needs.
In the UK property market commercial tenants are typically responsible for building maintenance and repairs, especially where a full repairing and insuring lease is in place.
This is in contrast to residential property investments where the responsibility for building maintenance and repairs usually falls to the landlord.
Stamp duty for commercial property is different from residential property, so assets like Student Accommodations and Care Homes below the price of £150,000 are exempt from Stamp Duty which is very attractive for investor clients.
Process of buying a commercial property in UK?
When you have found a commercial property you want to buy, you will need to make a written offer to the vendor’s commercial estate agent.
If the vendor refuses your offer, you will need to negotiate to reach a mutually acceptable level. The vendor has a number of factors to consider, including your price and the speed at which you can complete the deal.
When your offer is accepted, the commercial property is taken off the market to prevent other interested parties from closing in on the deal.
You should carry out a local authority search to ensure there are no findings that might impact the property and the wider area.
The search may include details of planning applications, building regulations, transport development and other issues, such as contaminated and polluted land.
You will now need to engage the legal expertise of a solicitor. The commercial agent will help you with a recommended panel of Commercial Property conveyancing solicitors. A document detailing the main points of the sale agreement will be drafted once your offer has been accepted. It is called the heads of terms.
The document will include the type of agreement , how the deal will be financed and proposed timescales.
Your commercial estate agent and solicitor will then start to negotiate the final details of your contract with the seller.
You can request that an exclusivity agreement, also known as a lock-out agreement is put in place. It will allow you a specified timescale to carry out the due diligence knowing that the seller will not negotiate with another party.
A survey of the commercial property will be carried out to make sure it is structurally sound and there are no major flaws that have not been accounted for.
You may also want to use this time to secure planning consents from the local council if you want to redevelop the commercial property.
Contracts will be exchanged once both parties are satisfied with the contract, you are happy with the state of the commercial property and the finance for the property is in place.
Other points which your solicitor can advise on, include:
- Setting up insurance
- Paying Stamp Duty Land Tax
- Registering your ownership of the commercial property with Land Registry
- Verifying whether you need to register your commercial property for health and safety
The deal will complete when the formal documents are signed, dated and delivered. Your solicitor will hand over the remainder of the purchase price to the seller’s solicitor, and you will receive the keys to your new commercial property.
What are the types of commercial property?
The majority of the commercial property sector is made up of Offices, Retails, Industrial and Leisure.
Other commercial property types include Petrol Stations and Schools.
Another special type of commercial property are Student accommodation and Care homes. The returns are one of the highest in the UK with upto 10% net returns. Being recession proof, these investments have proved to be best performing assets in their class.
Difference between Freehold and Leasehold commercial property?
When investing in commercial property in the UK, you will find two terms to describe the legal ownership of properties, freehold and leasehold.
Which you decide on will depend on your specific goals as an investor, but freehold properties are commonly the most sought after. When you buy a property that is freehold, you own both the property and the land outright. Leasehold commercial properties are however owned for a fixed period of time, and you will be subject to a contract between yourself and the freehold owner.
There are many reasons why investors choose Freehold wherever possible, but there are some things they should keep in mind when weighing up a property that offers either form of ownership, such as with a leasehold property, a person has the right to use a property for a set period of time that is agreed upon in exchange for rent. Once this period of time is over, the property returns to the freehold owner.
The length of the lease will vary and impact your ability to get a mortgage.Lenders usually need the lease to run 25-30 years after the end of your mortgage. So, if you want to get a 25-year mortgage the lease needs to 50-55 years before its termination. This means that it can be difficult to sell a property if the lease is less than 80 years.