Sale and Purchase

FAQs

What are heads of terms?

Heads of terms are principles usually agreed between a buyer and a sellers’ agent before lawyers are instructed. They set out the basis of the property transaction in broad terms.

What are business rates?

Business rates are charged if the building or part of it is being used for non-domestic purposes, for example offices, factories, pubs and shops. Business rates are set by the local council for the following tax year, usually in February or March.

When should I instruct a property lawyer to buy/sell commercial premises?

It is important to instruct a property lawyer early on, particularly if selling a business property. A lawyer can identify and resolve any issues before they are picked up by the buyer, reducing delays and even abortive transactions.

What work can be done before a buyer is found?

There is a substantial amount of pre-work that can be carried out by a property lawyer before a buyer is found. For example, the contract pack along with replies to standard enquiries can be prepared and even standard searches of the property obtained. These could then be sent out as soon as a buyer is found, potentially saving several weeks and even months of time. This would all lead to a smoother and more cost effective transaction for both parties.

Do capital allowances need to be identified before the sale of a business premises?

The buyer and seller cannot sign an election unless they know what capital allowances are available which may need specialist advice and (if allowances have not previously been claimed) may take some weeks or months to assess.

Can the loss of capital allowances devalue the property?

The loss of capital allowances may devalue the property and adversely affect its sale and as a result if these are identified in the transaction or if you are a seller, then you should consult your accountant.

Do I need to carry out a survey on the business premises?

The buyer of a commercial property should arrange a survey of the property to establish its general state and condition. The seller is under no obligation to inform the buyer of any defects, so the onus is on the buyer to discover them.

I’m buying a commercial property, will I be charged VAT?

It is not always clear when commercial property is advertised if there is any VAT payable on the sale price This can add 20% (at current rates) to the sale price so it is important to check this early on in a transaction. The buyer should raise this with the seller’s agents before putting in an offer.

I’m selling my commercial property, will I have to pay any VAT?

If the property has been elected for VAT purposes, then it must be charged on the sale price because, otherwise the seller would have to account for the VAT themselves. This is a different process from ordinary trading VAT registration. If the seller is not aware of the situation, their accountant may know or their lawyer can investigate this with HMRC on their behalf.

What are capital allowances?

Capital allowances can be offset against income tax and are available for specific kinds of capital expenditure effectively spreading the offset over many years.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.

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