A large proportion of businesses in the UK are started from people’s homes. For some, particularly online businesses, they never move from there. Working from home can be a great way to keep costs down when a business is new. However, not all homes are ideal locations for your business operations. For others, as they start to expand and need more staff, the home environment is no longer suitable and they then need to consider what type of premises they would need.
Commercial premises are not cheap though, and they often carry a wide range of costs and overheads that you would be able to avoid if you were working from home, so it is important to find a good deal that will serve the purposes of the business.
The Commercial Property Market
The commercial property market in the UK has been through a transition period since Brexit. This has devalued some properties and slowed down the rental market. The effects have been felt to various degrees in different parts of the country.
There are also some long-terms trends that are having an effect on demand. There have been shopping centres all over the UK that have been demolished or reused as something totally different. Housing and other accommodation has proved to be a popular new use for them. As more people shop online, some retail businesses have closed stores and opened warehouses instead.
Sharing space is an option that has seen significant growth, especially office space. Apart from being cheaper, it can also mean that companies collaborate and establish networks that help all involved.
Why Is Running Commercial Property So Expensive?
Regardless of whether you run your business from home or from commercial premises, there are many costs that are mandatory – and others that might represent a wise decision even if they are optional.
For instance, if you’re running a courier business from home you will have a legal obligation to insure your motor vehicle, and may decide that it’s wiser to do so through a courier insurance comparison service like Quotezone.co.uk, because this type of policy can include liability cover and goods in transit cover in addition to insuring your vehicle.
However, if your business grows and you do move into commercial premises you may need to add building and contents insurance, public liability insurance and employers’ liability insurance to your costs, which is just one of the reasons it’s often more expensive to run your business from a commercial property.
There are also business rates to consider, which are much more expensive than the rates you pay for your home. You will also have to maintain the building, internally at least, which again will add to your business’s overheads.
Is It Best to Rent or Buy?
Before you can decide which is best for your business you need to understand the difference. If you buy, either with your own cash or a mortgage, once the loan is paid off the premises belong to you. All the responsibilities that go with it do too, such as repairs. Buying normally requires a larger upfront investment. Although property usually increases in value, it could decrease if there is a crash in the market. You will have to pay tax on any profit you make if you sell it at a later date.
If you rent the property, it will never belong to you. You will pay rent as long as you occupy a term of years usually agreed to at the start. The rent can be increased over time. Internal repairs you may still be liable for, depending on what your rental agreement says, but larger repairs, such as a new roof, are usually the responsibility of the owner. They are more flexible than buying a property as it is simpler to leave one and move to another when you rent your premises.
The differences in buying and selling do vary with the type of premises you need. A shop on a high street will be expensive to buy or rent, but an office in one of the quieter parts of town will cost much less.
Make the Choice
Finding the property most suitable for your business and choosing whether to purchase or rent is down to personal preference. If you have the deposit to be able to take out a mortgage to buy, your business will have to be able to maintain the mortgage payments as moving to a cheaper place will not be so simple.
Renting is a good option if you do not want to have to part with a large sum of money to start with, and the growth of your business means you might have to move on within a couple of years. The flexibility given by renting can be a huge advantage, especially in the early years of a business.
Photo credits: eOffice