Interested in commercial property?
From your local fish-and-chip shop to The Shard, commercial property is essentially any building used for a corporate purpose – providing extremely lucrative opportunities for landlords. We’ve outlined everything that you need to know if you’re thinking about expanding into a commercial property.
What are the main benefits of being a commercial landlord?
Letting a commercial property can deliver a steady, long-term income.
After a few successful years, you’ll also probably receive a much higher return than you’ve seen on any of your prior investments – and it’s a relatively low-risk opportunity, too.
However, it’s worth knowing that commercial property will be a long-term commitment. You’ll need to be tied down and prepared to steer your new venture through every change in the current state of the economy. Perseverance is needed to successfully manage a property.
Costs and expenses
Letting agent fees
Even if your property is polished and ready for new tenants, you might still need some support in getting it onto the market. Most real estate agents charge a sizeable fee, so it’s important to be prepared for this if you’re not going solo.
Insurance
Obtaining relevant commercial landlord insurance could help to protect you and your assets against unforeseen circumstances. Letting large companies and their directors can be unpredictable, so it’s a good idea to find some peace of mind where possible.
Mortgage repayments
If you’ve not finished paying for your new corporate premises, you’ll need to budget every month to ensure that you have enough to cover mortgage repayments.
Maintenance and repairs
Your specific maintenance responsibilities will be outlined in detail in your lease. However, even if most lies with your tenant, we’d recommend aside keeping some money for emergency repairs and maintenance to your property.
Your responsibilities
Health and Safety
The greatest level of responsibility for health and safety lies with tenants, including compliance with fire safety regulations. However, you’ll still face certain legal responsibilities as a landlord, including those relating to communal areas. These will be detailed in your lease.
Gas and electrical safety
Responsibilities over gas and electricity will be outlined in your lease, but the responsibility could be either yours or that of your tenants. However, any commercial landlord must ensure that the electrical system is safe at the beginning of the tenancy and maintained throughout.
Fire safety
Again, specific fire safety responsibilities will be outlined in your lease. However, you might need to provide equipment including fire extinguishers and blankets, depending on the conditions of the lease.
Energy performance
Landlords are required to arrange and provide an Energy Performance Certificate. The minimum legal requirement is an ‘E’ rating or above.
If you’re ready to take the leap to commercial property, we know that it’ll be a worthy alternative investment – as long as you’re ready to commit to your progress and work closely with tenants.