Freehold commercial properties are often sold in two forms: vacant and subject to leases. In each scenario, there are important aspects to consider, including marketability, planning permissions, disclosure obligations, VAT implications, and statutory compliances.
It is difficult to say which type of property is more popular on the market. A vacant property provides flexibility for future development, change of use, or personal business operations; however, properties subject to leases come with existing tenants and lease agreements, making them attractive as income-generating investments to other buyers.
Planning
Planning is another important issue in commercial property transactions. A buyer will clearly want a property to have the required planning permission for the intended use. It is particularly important for vacant properties where a buyer may wish to redevelop or repurpose the space. A seller should ensure that all relevant permissions are documented and readily available for inspection; otherwise, it is likely to cause delay in the transaction or even for it be aborted eventually.
Disclosure
Another issue which could affect the progression of commercial property transactions is disclosure. The whole process is by nature for sellers to disclose the relevant information about the property and for the buyer to seek such information. Sellers must provide comprehensive and accurate information about the property, including any encumbrances, easements, or disputes. When selling properties subject to leases, full transparency about tenancy agreements is essential to maintain trust and prevent legal complications.
VAT
VAT (Value Added Tax) is another vital consideration in freehold commercial property sale, as this can significantly impact the transaction’s cost, so both parties should seek professional advice to navigate this complex area. It is always advisable for sellers to clarify VAT applicability as early as possible in the process and ensure all paperwork, such as VAT invoices or exemption certificates, is in order to avoid any unnecessary delay.
Statutory compliance
Lastly but not the least, statutory compliance is yet another issue which needs to be considered and planned in the early stage of commercial property transactions. These include building regulations, health and safety records, fire safety measures, and other environmental issues. Non-compliance with these requirements frequently leads to delays or liabilities for buyers and sellers. Obtaining relevant certificates and reports, such as energy performance certificates (EPCs) and fire risk assessment, is critical to streamline the sale process.
Conclusion
Selling a freehold commercial property—whether vacant or subject to leases—requires careful planning and attention to detail. Preparedness and transparency are the foundation for smooth and swift transactions. Lisa’s Law’s commercial property team has extensive experience in commercial property transactions. Working with our associated tax advisers, we are able to provide legal and tax advice to our clients to mitigate the relevant risks and maximise the value of their properties.
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