Posts Tagged ‘commercial property’

Commercial Property Market Weekly News Round Up

Sep 21st, 11 / 0 Comments

Euro commercial property landlord posts healthy and balanced value achieve

European industrial landlord Segro placed a 2.5 % rise in ful l-year net asset value, and said it may exit Spain and Hungary to focus on its more powerful core trading markets which includes the UK, England and Germany.

The manufacturer published EPRA NAV per give of 376 pence in the year to end-December 2010, up from 367 pence a 12 months ago, whilst its net condominium revenue increased 4.7 percent to 282.1 million lbs in the period, Segro mentioned in a assertion on Thursday.

‘Spain and Hungary are relatively small ventures for us, and the economics are not encouraging for us to put more into those markets,’ explained CEO Ian Coull, building Segro’s concentrate as a continent could be in Germany, America, Poland and Benelux.

At 0800 GMT, Segro’s shares opened its gates up 1.5 % to 326.8 pence every, forward of the 0.3 percent tumble in the broader UK property stocks index. Segro, that has a portfolio worth 5.3 billion pounds, explained it cut its organization team vacancy to 12 percent, from 13.5 percent a 12 months ago, and proposed a last dividend of 9.6 pence per give for a total 2010 dividend of 14.3 pence, up 2.1 percent on 2009.

UK retail property participant back again in the dark

The proprietor of the Bullring and Brent Corner buying centres bounced into the dark endure twelve months once the worth of its property empire recovered.

Hammerson described earnings of £620.2million for 2010 getting made a loss of &lb;453.1million in 2009. Net asset worth per share – a key determine of overall performance for property manufacturers – rose by a better-than-expected 17.6 per cent to 495p.

The FTSE 100-listed landlord, which also has rights to Studying’s Oracle and Cabot Circus in Bristol, mentioned the value of its British estate rose 12.5 per cent to &lb;3.9billion. The relaxation of the &lb;5.3billion property empire is in England and rose 1.9 per cent. Main government David Atkins mentioned the rise in VAT and strong cuts to general public spending could see some retailers struggle to pay their rent. 

US full giant shuts 200 stores

With the U.S. Bankruptcy Court for the Southern District of New York having signed off on the store decrease program which is part of Borders Group Inc.’s reorganization, the reserve retailer has tapped DJM Realty to rent 200 underperforming stores designated for closure by the end of April.

The leases accounts for a complete of just at the time of 4.9 million sq feet of retail space. The shops span 35 states, such as Alaska and Hawaii, Wa, D.C., and Puerto Rico; Borders international franchised functions have been not included in the bankruptcy filing.
The spaces array in measurement from roughly 12,900 square feet to 42,700 sq. feet, with the average keep size becoming 24,600 sq. ft. “Many the locations have outstanding options,” Brooke Horn, director of marketing with DJM, advised CPE. “Practically 30 percent have two-plus floors and most possess even far more. We have a lot of fantastic spaces.”

Thirty-five of the 200 retailers are located in Ca and attribute rents as low as $4.83 per square-foot and as elevated as $58 per square-foot. According to Marcus & Millichap Housing Investment Services, the national full vacancy charge began to fall in 2010 soon after skyrocketing 310 basis points via the recession, and is now on track to drop to 10 percent by twelve months’s end.

Though the full marketplace has yet to entirely recover, DJM is assured regarding leasing up the Borders shops. “We’ve had many interest in available properties from different retailers and a couple of non-retailers,” Horn stated. “Most of them are supermarkets, gyms, bowling alleys, restaurants. We’ve had a lot of telephone cell phone calls and a lot of inquiries.”

Amongst the variables hitting in DJM’s favor is the truth which quite a few of the retailers are located in trading markets with elevated limitations to access such as Atlanta, Boston, Chicago, Dallas and New York, as well as locations in Northern and Southern Ca. Concur Realty Corp. has rights to 13 of the 200 properties occupied by Borders beneath triple net leases, in addition to the company’s 460,000 square-foot company headquarters in Ann Arbor, Mich.

Mortgages

All You Need To Know About Choosing The Commercial Property Solicitor That’s Right For You

Sep 4th, 11 / 0 Comments

Choosing the right commercial property solicitor can make or break your property deal.  Just as finding the right commercial mortgage lender is key to financing your transaction, finding the right legal representation can be critical to a smooth purchase. 

So it could be argued it is of the most vital importance you hire the correct solicitor, one who you feel is trustworthy, knows what they’re talking about and seems capable of getting the task done. We’ve put together a quick introductory guide below to help you identify such a person with the qualities needed.

Red Tape: Make sure you get a solicitor who is under the umbrella of the Solicitors Regulatory Authority, those that are in the RSA are regulated and fully insured members. This is advantageous as you know they’re not a stereotypical shady solicitor, as they’re insured it means you as the client are protected during the mortgage process as well as having an official outlet for complaints through the RSA if you feel the need to take that route.

Location: A locally based solicitor is likely to know more about the property, the local area and any local searches that may be required.  Whilst solicitors in other towns may be able to undertake the work for you, they may not boast the same level of local knowledge as a solicitor in your vicinity.

Cost: While you want someone local, that doesn’t mean to go for the lowest denominator, in other words the cheapest solicitor you can find. You will want someone you can trust and who will put the hours in to get the job done, and in most cases the cost reflects the quality. Talk to a number of firms and treat it as an interview to see what services they will offer during the process and pick the one that suits your requirements.

There is no set estimate of what the legals will total at the end, depending on the deal it can run from a few hundred pounds to thousands of pounds. Always keep an eye on the added ‘disbursement’ costs for things such as VAT or Local Authority Searches to keep costs under control.
When deciding on a commercial property solicitor, be sure you are aware how their billing works. Are you paying a fixed fee or are you being charged for the work that they complete for you?  The law obliges Solicitors to give you an estimate of the likely costs of a transaction. The fees should be consistent with this original estimate, and you should start to ask questions if for some reason they are not. When it comes to your money, don’t be embarrassed to ask about costs with a solicitor’s firm before you hire them.

Find an Experienced Representative: When deciding on a commercial property solicitor it is a good idea to find one with a long track record and experience in dealing with acquisitions like yours.  Feel free to ask them if they have worked on this type of commercial property before?  Investigate what experience the solicitor has and find out what similar properties they have worked on. Again, your money and your business future are at stake and you need to find out as much as you can.  It may be useful to discover how long they have been practising and  if they have Law Society accreditation

As well as sorting out costs and services, always make it a point to ask who exactly you will be dealing with. Even in a small local law firm there could be a few solicitors working in the practice, when you go to meet them you might just end up talking to the guy in charge and mistake him for the person who will be doing the work. You don’t want to end up with the graduate straight out of university being the lead on such a complex and expensive deal.

Choosing a commercial mortgage solicitor is just like choosing a commercial mortgage lender. There are dozens out there and searching the market and doing your research before settling on one firm is essential for the best service you can obtain.

Howard O’Gollegos writes for Just Commercial Mortgages the UK’s No.1 site for the latest commercial mortgage rates and commercial property finance news.

Mortgages

Commercial Mortgage Costs – 5 You Need to be Aware Of

Aug 29th, 11 / 0 Comments

Taking out a commercial mortgage is not always quite so straight forward as many may believe. There are a few things that you need to think about beforehand, and in this article we look into the costs involved with entering into a commercial mortgage contract.

Your cash deposit is not the only cost involved. The deposit is the amount of money that you must set down in order to stake the loan, and this is usually 25% to 50% of the purchase price for commercial loans. But there are other costs to take into consideration, which we will now explore to help you to fully understand the real cost of a commercial mortgage.

Arrangement Fees For Setting Up The Mortgage: The arrangement fees are commonly a charge of around 1% (but can be slightly higher or lower), and they are charged by the lender for the administration involved with setting up the loan for you.  In some cases, the lender will allow you to add the fee to the value of the mortgage, to save you having to pay more money up front although you should be aware that you will be charged interest on it if you do add it to the loan amount.

Valuation fee: The property has to be professionally valued before it can be purchased and both the purchaser and the lender will need to have access to a full valuation of the property. The valuation fee that you will have to pay will depend on the size and the value of the property that you are interested in, but it can become more costly if a full survey is needed. As a rule of thumb a survey is always a good idea.

Don’t discount the need for a thorough structural survey by a conveyor, wither you or the lender could demand this to ease any fears of what the valuation brought up, especially if it is an older building. Obviously this will send the costs of the valuation fee skywards and to be 110% sure you might need/want to get two surveys conducted by separate conveyors.

The Professional and Legal Fees: Next comes everyone’s set of favourite people to make the process more complicated, the lawyers and solicitors. Legal contracts need to be drawn up and need checking so there are no loopholes or grey areas. This may also cover the setting up of insurance policies and site surveys and reports, depending on the type of property and transaction you are going setting up.

Early Repayment Charges: When you sign up for a commercial mortgage, make sure you understand how any ‘early repayment charges’ may work.  These are a ‘penalty’ that you pay if you decide to repay the mortgage early; typically within the first three to five years.  Early repayment charges are often a percentage of the commercial mortgage amount and so can be quite substantial.

Broker fees: A mortgage broker can be a very useful service to employ when you are looking for the best deal, but as with all services, there is a price tag attached. Approaching a broker is a good idea because often they have access to rates that are not available on the high street, but many will charge a fee for their services.

Again, it is worth checking with your broker whether they expect payment from you upon completion in a lump sum or they might take a commission fee directly from the lender. The fees can range because of a variety of factors, so this is something you will need to discuss to get a ballpark figure, though you can expect the fee to be anywhere from £300 to 1% of the mortgage borrowed, a very broad spectrum I think you’ll agree.

When you are working out the cost effectiveness of your development plan, and the relative cost of purchasing property, don’t leave additional costs off the balance sheet. It is tempting to make a deal look better than it actually is by leaving certain costs to one side. This is a false economy and won’t help you to fully judge whether a commercial purchase is right for you.

Howard O’Gollegos writes for Just Commercial Mortgages the UK’s No.1 site for the latest commercial mortgage rates and commercial property finance news.

Mortgage Refinance, Mortgages

4 Topics You Should Be Aware Of When Letting A Commercial Property

Aug 23rd, 11 / 0 Comments

Buying a commercial property can offer you great returns both in terms of income and capital growth.  However, once you have completed on your commercial mortgage and taken ownership of the property you then have to worry about leasing the property, which will often be done through a commercial letting agent.

You must accept that this will be a fundamentally costly process for your business, though if you consider that the expenditure is an investment, it does make a lot more sense. You will have to put a considerable amount of business capital into the purchase of a commercial property. (typically you will need at least a 25 per cent deposit to be eligible for a commercial mortgage, a far higher percentage than in a normal mortgage). Alas, this is just the beginning of the expense, not the end. There are various other fees and charges that you will encounter when taking out a commercial mortgage or business loan.  The purpose of this guide is to explain five of the most common fees and charges that are incurred when taking out a commercial mortgage to buy retail, manufacturing or office space.

Arrangement or Booking Fees: Banks, like all service sector industries, charge for as many of their services as they possibly can. Banks charge arranging fees for negotiating your mortgage for you. These are often not rigidly enforced and often open to negotiation. They can often depend on other factors such as the interest rate that you are being charged.  On average you are likely to pay a fee in the region of 0.5 to 1.5 per cent of the total value of the loan, but it is becoming increasingly common for lenders to add the arrangement fee to the value of the loan.

These facilities could include bathrooms for staff and customers, a kitchen or canteen for staff to have their lunch and so on. You will therefore need to think about whether you are prepared to undertake the work to have these put in if the building does not already have them. The interiors may also need updating in order to attract more tenants – especially for retail premises and offices where customers would be going inside.

Energy Performance Certificates: These days the law dictates that you must pay for and provide your tenants with an energy performance certificate (EPC).  A commercial EPC can be costly, so you will need to keep this in mind.  Depending on the building, this can cost a few hundred pounds.

If you do not provide the EPC, you can receive a hefty fine, so it’s just not worth the bother. Make sure that you get an EPC sorted out so that prospective tenants will know how energy efficient the premises are.

Costs For Redeeming Your Mortgage Early: If you repay your commercial mortgage early you may have to pay fees to exit the loan.  Even changing to a new mortgage product can be classed as exiting the loan, as the commercial mortgage would be repaid in such an instance and so you need to remember this if you want to change lenders. The fees also apply if you sell the property within the early repayment period.

The requirements under the Disability Discrimination Act will already have been considered if your property has been recently renovated or modernised.  Both planning consent and building regulations will have taken these issues into account.  In addition, your tenant will be required to comply with all laws and regulations regarding this issue when they sign their lease.  So, as a landlord you should be prepared to allow tenants to undertake any work necessary to bring the property in line with these regulations.  This may include building access ramps or modifying communal areas such as hallways.

The Dangers of Asbestos: You will need to have the building checked over by professionals to ensure that the property does not contain asbestos, as this has been deemed to be a dangerous and toxic substance.  If any is found then you will need to ensure that any works are taken care of to ensure that it is not dangerous to anyone inside the building, and any surround areas.

As you can see, there are many costs to consider, so you will need a good amount of money behind you before you start thinking about buying commercial premises.

Howard O’Gollegos writes for Just Commercial Mortgages the UK’s No.1 site for the latest commercial mortgage rates and commercial property finance news.

Mortgage Refinance, Mortgages

Buying Commercial Property – The Benefits and The Drawbacks

Jul 11th, 11 / 0 Comments

Buying your own commercial premises can add some real value to your business, so it’s a great idea.  But it is a big thing to do and so you do need to think about it carefully and ensure that you’re making the right choices.  In this article we look into the good and bad bits of getting a commercial property and commercial mortgage.

Pros: There are plenty of advantages to buying your own commercial property.  One of the main reasons that many companies take out a commercial mortgage is that the repayments are often the same as rental payments.  Indeed it can often be cheaper to pay a commercial mortgage then your monthly rent.

Another good thing about commercial mortgages is that you can fix the rate of interest, so you will always know what the repayments will be – well, at least for the ‘fixed interest’ period, which is usually anywhere between 3 and 10 years depending on what you prefer to do.  This means that you are a little more stable, as often when you are tenant your rental payments can be increased at any time often with little or no warning from the landlord.

Subletting, if your property is large enough, or you bought big thinking of future expansion, then why not higher space out to another small business in the mean time? Through this option you can cover a last chunk, possibly even the whole mortgage payment by taking this option. The only pitfall here to check on is with your commercial mortgage lender, you might need permission to take this action.

If you do buy a property that is slightly larger than you need and rent part of it out to another business, you can also sit safe in the knowledge that you have the space there to expand the business later on if needed. This is a great way to go about it as selling the premises and buying a larger building can be costly, especially if there is an early repayment charge on the commercial mortgage.

Owning your own commercial property means that you also benefit from any appreciation in the value of the property.  Property prices tend to rise over the long term and so owning property means that you will benefit from any increase in its value when you come to sell it at a later date.  Furthermore, the interest payments on your commercial mortgage are tax deductible.

Cons: In two words, the deposit. Even in a booming property market, commercial mortgage deposits are eye wateringly high, you can expect the average deposit requirement to be circa 30% to 50% of the valuation. This could significantly drain cash out of your business which you made need for expansion or a rainy day, so think and plan carefully before you take a commercial mortgage on.

It will also be a more drawn out process if you need to relocate as well as an expensive one, either to expand into larger premises or because your location is not attracting much business, so think about the location and property size before entering into a commercial mortgage which may be difficult to get out of in the first few years.

As for the last round of negatives: the costs don’t stop with a just the mortgages, half a dozen insurance types and policies will be needed, liability, contents, building etc. Then let’s not forget the maintenance costs, which have to be dealt with quickly especially if you are subletting to other companies, so you can expect to fork out for any damage or maintenance needed that happens on their part of the property.

If you’re looking for solid grounding and foundations for your business (with an eye on future expansion) then taking on a commercial mortgage can be the more beneficial option to take. All we can say is just don’t go in blind, do your research and impartially balance all the positives and negatives and be firmly committed to the idea of a commercial mortgage.

Howard O’Gollegos writes for Just Commercial Mortgages the UK’s No.1 site for the latest commercial mortgage rates and commercial property finance news.

Mortgages

Utilizing Concrete Sealer to Shield as well as Preserve your Own Driveway

Jun 9th, 11 / 0 Comments

Do you find yourself fed up with setting up a new garage which unfortunately cracks as well as cracks rapidly? Have nearby neighbours, friends or family remarked on the condition of your concrete, or perhaps tripped over its holes? Concrete drive ways, despite the fact that the most common selection of garage building, carry together with them a couple of problems that should be taken care of should you be considering maintaining your drive way and looking good. One of the major problems that concrete driveway owners deal with is that of tiny holes and splits which develop within the concrete through extended periods of time. This is because of its physical arrangement – concrete can easily take in moisture and other materials into its pores that can eventually damage the look and design of your garage’s concrete floor. Bare concrete is also at risk from a thing called freeze/thaw deterioration if you reside in a frigid weather. Whenever concrete gets frozen and thaws later on, it can trigger significant damage to the interior framework.

 

The way to avoid these types of accidents from developing would be to have someone come to your home and apply a concrete sealer. Concrete sealant is the most effective means to combat these types of every day chips as well as crevices that makes your own driveway seem dilapidated and also unattractive. Additionally, it would make your own driveway alive. Perhaps you have visited someone else’s residence and observed that their drive way or patio area have a sleek, almost lustrous gloss over the top of it? This is a really high quality appearance which will cause virtually any guest surprised as well as pleased. Using a concrete sealer brisbane will assist you to make this gorgeous appearance.

 

So how exactly does concrete sealant do the job? Concrete sealer is a kind of coating that would complete 2 things for your drive way: it would fill up the pores within the concrete, making it 100% immune to dangerous elements getting in there as well as ruining the color and durability of the concrete. Next, concrete sealant will create a 100% impenetrable covering over the top, which will certainly stop dampness build-up as well as break down.

 

Yet another choice is to apply epoxy flooring brisbane. This is much like concrete sealant, but it possesses a much longer lifetime and also far better performance. Nevertheless, because of this, it is more expensive. Many people make use of epoxy floor coverings for places that usually take a lot of damage, such as warehouses or perhaps hangars, as this is exactly where it is most beneficial. For your drive way nonetheless, it likely isn’t essential to utilize epoxy floor coverings unless you like a particular look. Concrete sealer needs to be a lot more than sufficient for the process, and it is a far more economical method to preserve your drive way.

 

Think of utilizing a concrete sealant in your drive way right now and also be a part of the thousands of people who’re enjoying 100% damage free and staining proof drive ways. It is a smart and also very economical option which will pay back long term as the worth of your home will certainly increase extremely along with a driveway protected by concrete sealant.

Mortgages

NOW is the Right Time to Invest in UK Commercial Property…

Jun 4th, 11 / 0 Comments

The commercial property market has seen few years as difficult as 2009 and 2010, the growing number of vacated shopping parades, and empty business parks and offices bear witness to the extent of the recession in this sector. There might be some light at the end of the tunnel however, as indicators suggest a recovery in commercial letting.

As the British economy begins to recover, data from a leading property group has shown that the commercial property market in the UK is showing signs of an upturn.  And, with the Government agreeing higher commercial mortgage lending targets, loans and finance to buy property should be more readily available in 2011.

The property index has shown that in spite of predictions that the property market would see a fall in the first part of 2011, it actually saw a slight rise. OK, it was less than 1% but it was a rise nevertheless.

Central London offices led the recovery with a capital growth of 1.1 per cent and total returns of 1.5 per cent in February.  Another sector that helped nudge the figures upwards was retail warehouses, which showed a capital growth of 0.5 per cent in February 2011.

A spokesperson recently made comments that the confirmation that growth is increasing was an encouraging sign that the market is beginning to recover after a long recession.  It was also pointed out that despite the many experts that in late 2010 predicted that the retail sector would struggle, it’s actually doing much better than was thought, which is promising news to many businesses and those who have been waiting to invest in commercial property using a commercial mortgage.

The Institute of Chartered Surveyors have agreed with the recent data after confirming that they have seen a definite increase in not only the amount of commercial properties not only becoming available for sale, but also the amount of investors who are in a position to be able to be able to afford them.

There is also room for optimism in the availability of loans in the commercial mortgage market. Greater access to commercial mortgages and other lending  is also destined to help revive the commercial property market.  A target has been set by the government of £76 billion to lend to small businesses has been set in 2011 – this is a  15 per cent increase on 2010.  Also as part of the Government’s ‘Project Merlin’ scheme, £11 billion of additional commercial mortgage lending has been agreed for this year.

When this lending should begin in earnest was never really made clear, but a pickup has already begun, no buoyed by the news of Project Merlin discussions, in fact it might just be the final hurdle on the march to recovery. January data from the Bank of England already revealed an upsurge of £1.1 billion in business loans to SMEs, a 2.6% growth from the last quarter, and this was before Merlin was finalised.

As interest rates are still very low, this is helping greatly while property prices, although increasing, are still also low. The combination of the low prices and costs of commercial mortgages is making commercial property investments extremely desirable at this time and so commercial property has once again increased in demand, with its value set to rise.

Now could therefore be the perfect time to invest in commercial property.  With property prices beginning to show signs of recovery and banks agreeing higher commercial mortgage targets, 2011 could be the year to buy.

Howard O’Gollegos writes for Just Commercial Mortgages.com the UK’s No.1 site for the latest commercial mortgage rates and commercial property finance news.

Mortgages

Would It Be Better To Buy Or Lease a Commercial Property From My Business?

May 18th, 11 / 0 Comments

Buying or renting your commercial premises can be a tough decision, especially if you are a relatively small business. But what is the right choice for you?

When you business is new and expanding, the likelihood is that you may need to relocate in the future, especially if your business grows quickly, or if you gather the funds to move to a more sought after location.

When To Rent: As a new business you’ll probably not have the funding available for a commercial mortgage, as deposit payments of between 25 to 50 percent can be required. It’s a totally different ball game to residential property mortgages because it’s riskier for the lender. Although it’s a long term investment, you need a big sum up front in the first place, which isn’t easy for a business that is very young and still building their assets.

One of the best points about renting over buying is that you are not responsible for certain costs. The landlord will usually cover the costs involved with maintenance such as fixed broken windows and water pipes, as well as any redecoration and modernisation that is required and costs for security. As a tenant you will also avoid the issue of the property value dropping if the property market falls.

Leasing your premises can also offer more flexibility, so that if you do expand you will be able to easily and quickly shift to a bigger commercial property. The costs involved with moving if you are renting a building are much lower than the costs involved with buying and selling, as you have to take into account stamp duty land tax as well as the legal costs and lending costs of the mortgage.

Buying Commercial Property and Commercial Mortgages: Buying a commercial property has the advantage that every mortgage payment means that the company owns more and more of the property, rather than it being dead money if you are renting.   Property is an excellent investment as the value increases, this increasing the business asset value. Mortgage payment can often be lower than rental costs too if you can get a good interest rate.

Renting your business premises: For a relatively new or growing company, renting maybe your only viable option as you may not have sufficient trading accounts or capital to be able to apply for a commercial mortgage.  You may also decide that buying stock or expanding your business rather than investing it all immediately in commercial property is a more viable option.

An advantage of owning your own business premises is that you can let out unused parts of the building to other businesses and charge rent, which can then be put towards your mortgage payments to reduce your costs.

Renting a commercial property also eliminates many associated property costs.  You won’t generally be liable for maintenance, decoration and repair costs, saving your firm a substantial sum.  And, renting premises means that you are not adversely affected by a slump in property prices or by large hikes in interest rates.  Whilst your rent and rates may rise every year, other general economic factors will have less of an impact.

Whatever you decide to do, make sure you think through all of your options first as a commercial mortgage is not something to be taken lightly – you need to be certain that you can afford it, but also need to consider whether you’re likely to need to relocate in the near future.

Howard writes for Just Commercial Mortgages the UK’s No.1 site for the latest commercial mortgage rates and commercial property finance news.

Mortgages

Commercial Property Investment – The 5 Best Advantages

May 18th, 11 / 0 Comments

The Investment Management Association (IMA), an organisation that represents the UK investment management industry (its members manage over £3 trillion of assets) released a report for the last three month of 2010 that shows a recovery has potentially started in the commercial property market. Many of us will breathe a sigh of relief as we start to see the green sprouts of a financial recovery. The very worrying sight of closed shops and businesses that seems to have beset our towns and cities only added to the bleak outlook. The sooner we see those boards coming down and business flowing again the better!

Even though the market in the last few years has been beset by problems, there are still some very good reasons to owning and investing in commercial property. As the sector becomes viable once again let’s examine the top five reasons for becoming involved in commercial property.

Length of the Lease: Unlike residential property, commercial properties are generally let out by the tenants for a longer period.  Many commercial tenants will sign a contract of at least 5 years or more.  This means that you can almost guarantee your income for a longer time, which is not the case with residentials.

Commercial Properties Are Well Looked After: Because a business’s reputation is at stake if they do not look after the property that they are letting, they tend to take care of the place. Not only that, many businesses operating from offices may have clients or customers visiting and so they will want the premises to look clean and tidy.

Commercial property leases are longer: The trouble that many first time residential landlords face is having a property empty for weeks or months every year. It is at this point that a viable business in residential letting can become a liability. Commercial lets have few of these drawbacks, they tend to be between 3 and 20 years.  It is not unusual for a tenant to sign a least of five to ten years. The advantage to the commercial landlord is security.

Tenants have to give longer notice: Another advantage to landlords when it comes to security is the fact that commercial contracts normally stipulated that the tenant has to give six months notice before they end their lease. This gives the landlord a lot of time to find new tenants and avoid the dilemma faced by many residential letters who have can see their finances hit by properties standing empty for long periods. In the current unstable economic climate, finding tenants that offer medium to long term stability is a very wise move.

Rents are higher and more certain: Many investors like commercial properties because of the excellent yields that they offer.  Commercial rents are often higher than residential rents, generating additional income on a monthly basis.  Another advantage of commercial leases is that they are generally subject to an annual review which generally results in the rent being increases for the subsequent year.

You can buy using a commercial mortgage: Since the property bubble of the past decade burst and the get rich quick dream of buy to let residential properties vanished, it has become much harder to get a buy to let mortgage. Many mortgage lenders have decided that the buy to let market is more trouble than it’s worth and have abandoned it completely. Those that still offer buy to let mortgages are demanding far higher deposits.

Many prospective property buyers have withdrawn from the buy to let market because of the difficulties that it now faces, without considering the advantages of commercial letting. Commercial mortgages are widely available still and last year nearly £200 billion was lent to private industry, a sizable chunk of which was spent on rent. The next few years should see a relaxing of lending and borrowing as the economy gradually recovers.

If the UK and the global economy is recovering this will in the main be led by business. And as business starts to boom then business will need more space. More office space, more factory space and more warehouses, not to mention the shops and service industries. All driving the commercial property market onwards and upwards.

Howard O’Gollegos writes for Just Commercial Mortgages.com the UK’s No.1 site for the latest commercial mortgage rates and commercial property finance news.

Mortgages

The Six Downsides of Commercial Property Investment You Might Have To Face

May 17th, 11 / 0 Comments

It should come as no surprise that property investment remains strong and more people are expressing an interest to get on board. With the buy to let market saturated, the canny investor would and should consider investment in commercial property, the chances for increase in value and the income generated will only grow as the economy becomes stronger in the next few years. The benefits are obvious and talked about everywhere, but not everything is sunshine and roses in life, so here are six points to be wary of when investing in commercial property.

Commercial Property Can Be Empty For Longer Compared With Residential Lettings: Commercial leases do tend to be contracted over a much longer period than residential letting do, however finding a tenant can be a test of patience as demand for commercial property is only a fraction of the demand for residential property. So be prepared to see your commercial property empty for potentially months and to take the financial hit that comes with it.

High Mortgage Costs: Commercial mortgages are often on higher interest rates than residential r buy to let mortgages,  and the mortgage fees are generally higher too. You will also be required to put a large deposit down, usually between 25-50%.

Bear in mind that in addition to commercial mortgages often being offered at higher rates than other types of secured lending, you may also have to put down a larger deposit to buy a commercial property.  Banks will typically require a deposit of 25-40 per cent in order to agree a commercial mortgage, compared to 20-25 per cent on a buy to let investment.

High Purchase Costs: One of the most important things to consider is that the costs of buying a commercial premises are high in comparison to residential.  As the properties are generally quite large, the purchase price will be higher, which means that so will the stamp duty land tax and the other fees involved with setting up a commercial mortgage.

More volatile during a recession: During a recession, many businesses cease trading or go into administration or liquidation.  This reduces the demand for commercial property, making it a much more volatile market than residential property.  Always take into account that commercial property is more likely to suffer in a recession than residential homes.

Selling Commercial Property: Because the commercial property market is more of a specialist one, it can take much longer to agree a sale, although the good point is that the sale will rarely fall through.  Due to the amount of legal work that is involved with a commercial property sale or purchase, the process can take a long time and can be very drawn out so you remember that you’re very unlikely to get a quick sale.

Commercial Property is Always Difficult to Sell: It doesn’t mean it won’t be unsellable, but as with rental voids discussed earlier, expect a longer period of time on the market when putting your commercial property up for sale. One of the main reasons being negotiations and the legal requirements can drag out a deal into months even when you do gain interest in the property, for this reason alone commercial buyers are much more cautious about what they want to buy.

Before signing on the dotted line, make sure that you research the commercial property market to ensure that your property is in a desirable location so that you won’t be short of tenants and won’t find it too difficult to sell the property in the future.

More and more people understand the opportunities offered by commercial investment.  Whilst large institutions and pension funds have been big players in commercial property in the last, it is possible to get a great commercial mortgage deal and profit from commercial property as an individual investor.

Howard O’Gollegos writes for Just Commercial Mortgages.com the UK’s No.1 site for the latest commercial mortgage rates and commercial property finance news.

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