Buying a commercial property
If you are buying a commercial property in the UK you should be aware that the laws covering this in Scotland are slightly different from those in England and Wales. This guide assumes that English laws will apply. Below we list for your information some of the key stages for a typical transaction.
- Identify a suitable property.
- Establish its value – you may want to consider using a professional service for this function.
- Organise your source of finance – If you require a mortgage you will need to consult with a suitable lender.
- Make your offer to buy the property – this is usually done through a property agent
- Negotiate the terms of the sale – you may want to consult with a solicitor for this.
- Prepare heads of terms – your solicitor should prepare these and hand them to the sellers legal adviser.
- Carry out due diligence – You should by this time have appointed a solicitor to act for you and he or she will arrange for this and any physical surveys or inspections that are deemed appropriate.
- Prepare the transaction documents – your solicitor should arrange this with you. Typical documents are;
- Finance document if applicable.
- If leasehold, the sale contract and transfer document.
- If purchasing an existing lease – the sale contract the transfer document and any necessary landlord consents and any lease security documents
- If purchasing a new lease – any landlord consents and any lease security documents. There may also be a contract known as an agreement for lease, depending upon the circumstances
- Transaction report – your solicitor will report to you on the details of the transaction.
- Exchange of contract – the legal documents will be signed and contracts exchanged. Note that it is normal for a deposit to be paid in relation to a freehold transaction.
- Completion – completion (or closing) of the transaction either by:
- Signing and dating the transfer of the property interest (where the freehold or an existing lease is being acquired) and paying the balance of the price.
- Signing and dating the lease (where a new lease is being granted) and making any necessary payments under the lease
- Stamp Duty – pay and Stamp Duty Land Tax and the registration fees of the Land Registry.
Note that some of these stages may overlap each other or run in parallel.
Professional Charge & Fees for commercial property purchase
What you should budget for in way of professional charges and fees
Apart from the actual agreed purchase price of the property, there are a number of other costs that will be incurred before you will own the property. As a general guide you should consider the following;
- Agents fees – these can be between one and two percent of the purchase price of the property and these fees will attract VAT at the current rate of twenty percent.
- Valuation and survey fees – these will again fall into the same category as stated above.
- Legal fees – these are normally levied as percentage of the purchase price/rental value plus VAT. These fees may vary depending upon the nature of the transaction.
- Registration fees – variable but usually not more than about £1,000.
- Stamp Duty land tax – these vary depending upon the nature of the transaction and can be quite considerable. Rates for this can be found on the UK government website.
- Other professional costs – where the buyer is a non-UK company costs are typically those relating to the provision of an opinion letter from a lawyer within the appropriate jurisdiction confirming that the overseas entity has capacity to enter into the property transaction.
If not already budgeted for in the purchase price you should consider the cost of any works that may be required to the property to bring it into a suitable condition for its intended use.
Business Protection
Having now purchased your commercial property to conduct your business, you will want to look at your business risks and what you can do to protect against them. As far as normal business risks of damage to property, accidents to personnel and loss of equipment, these sorts of things can generally be insured. However, often the real risk to a business is when an illness or accident occurs in a partner, rendering him or her unable to function and nothing has been put in place to settle how the business should be managed under that circumstance. This is where having set up powers of attorney can protect the business.
Business power of attorney
A lasting power of attorney allows you to delegate legal authority to another person to manage your business interests if you are unable to do so. If no lasting power of attorney is in place and such an event happened, an application would need to be made to the court to establish what should happen. This process could take many months to resolve in which time the business could be damaged or lost.
Things to consider when considering setting up a power of attorney for your business
- Who has authority to pay bills or sign cheques or release salaries.
- How many company directors are required before making any important business desisions.
- Could a business loans or an account be frozen if one of the company directors is unavailable.
- Are any personal assets such as your house secured against business loans and could they be endangered if there is no plan in place.
- Who deals with your insurance companies, files your company tax returns, etc.
Under the terms of your Business lasting power of attorney (LPA) you can specify who can act on your behalf on different matters. You may appoint several people – legally called ‘attorneys’, although they are not necessarily legally qualified persons – that you trust, to all work together, or to work on different decision making areas.
These attorneys may be business partners, or family members, or a mixture. You may want them to take decisions jointly in certain cases, but have the freedom to take decisions independently in others.
Once you start appointing attorneys to work together on some areas, but not others, it becomes extremely complex and you will certainly need expert legal advice.
Property Litigation
Whether you are a home-owner, landlord or tenant, it is likely that situations will develop in your business that becomes beyond your own ability to solve. This may be for a number of reasons but where the matter is likely to be referred to a court then employing the services of a competent legal firm will become very advisable. Expatriates.co.uk can help you by putting you in touch with legal professionals who specialise in these areas as shown below:
- Landlord and tenant matters generally
- Possession of property and rent recovery
- Obtaining deposits
- Dealing with unlawful occupation (squatters)
- Boundary disputes
- Easement and right of way issues
- Disputes over financial interests in property
- Mortgage disputes
- Nuisance and trespass problems
- Building disputes.
Debt collection
In recent times, there has been a growing tendency for large firms to withhold payments of services to their service firms often because of their position as the dominant force. This is one of the main sources of difficulty for small trading companies and can cause them to go out of business. Collection of business debts is vital if a business is to survive and there are a number of ways to do this as shown below.
- The business owner or staff can attempt this by themselves.
- Collection agency – this is now quite a common arrangement and collection agencies can often be your best hope to collect money from a debtor. These agencies can often charge as much half of what they collect but sometimes its preferable for a business to have some income as opposed to nothing. You can find out more about collection agencies by visiting the Commercial Collection Agency Association.
- Small claims court – you have the option of filing a lawsuit to get any money you’re owed and you may be able to file a claim in a small claims court to recover the money owed to your business. These courts are designed to eliminate the high costs of attorneys and other court fees and this makes them popular with small businesses for the collection of debts. We understand from one source that approximately sixty percent of applications to small claims courts are by small businesses.
- Instruct a solicitor – in particularly difficult cases you may have to file a lawsuit in order to recover the debt. There are higher costs associated with this as you will have to pay both legal fees and court costs and these cannot always be accurately determined at the outset. For small businesses this is usually a position of last resort.
Employment
It has been said if jokingly that it is usually when a business needs to employ someone that its problems start. Within the UK it is relatively straightforward to employ someone although how you set that up can be very important as it may feature in any future staff disputes. Employment law is very onerous for employers and is so complex that most business owners never fully understand it.
We now have employment tribunals as a first step to solving employment disputes but these can be heavily weighted in favour of the employee as politicians only relate to votes and it is people who cast them.
Expatriates.co.uk can put you in touch with professional legal firms who will be able to help you should a difficulty arise. Some typical areas where you may require legal assistance are as follows.
- Grievance and disciplinary procedures
- Unfair dismissal
- Redundancy
- Deduction of wages
- Employment contracts
- Tribunal representation
- Settlement agreements
- Professional Negligence
Professional negligence can occur in a range of ways and via a lot of professional activities and is a large subject in its own right.
Immigration employment services
Expatriates.co.uk has arrangements in place with lawyers who specialise in this very complicated field. If you are experiencing any difficulties in any of these areas please let us know and we will arrange for a specialist to contact you at your convenience.
Services
- Arrange a one-to-one discussion with your dedicated immigration caseworker which will guarantee a personal and pleasant service throughout the process.
- Provide you with the opportunity to their premium service centres across the UK. This service ensures that you will receive your visa on the same day rather than having to wait months for a postal application.
- Consultations – these can be arranged to suit your circumstances and can be in person, by letter, by telephone or by email.
- Progress updates – you will be regularly updated on progress with your application.
- Fees – You will be provided with an easily understood statement of the fees involved.
We fully understand the personal nature of the issues involved in this type of litigation and you can be assured that all enquiries will be dealt with discretely and confidentially.
Tier 1 (General) Extension
Tier 1 (General) replaced the highly skilled migrant programme (HSMP) and was closed to new applicants in April 2011. However, those who currently hold a tier 1 (general) visa remain able to extend their visa for additional periods of two or three years.
If you hold a tier 1 (general) visa for five years you or an employee will become eligible to apply for Indefinite Leave to Remain (also known as settlement or permanent residence) providing that you meet the other requirements.
Section tier 2 (general) for employers
Please note, this is one of the most complex areas of Immigration Law and so it is strongly advised that anyone employing workers from outside the European Economic Area obtains advice and assistance from a competent adviser. Expatriates.co.uk associated specialist lawyers will be there for you in every step of the process from applying for a sponsor license so that your business can benefit from employing the best person for the job, to ensuring that you are compliant with all legal and regulatory requirements.
They are experienced in submitting sponsor license applications and issuing certificates of sponsorship whether restricted or unrestricted. They will also be able to assist your employees and their dependants with their other immigration needs.
Fines on businesses for non-compliance
The UK government has recently proposed legislation to increase the punishment for businesses employing illegal workers. Under this proposed legislation the government will have the following powers.
- To issue a custodial sentence of up to five years for employers who employ someone they know or have reasonable cause to believe is an illegal worker.
- To close a business for up to 48 hours for those that continually fail to comply with the regulations.
- To place businesses under special compliance measures and carry out regular inspections.
- To issue custodial sentences of up to six months for employees found to be working illegally.
- To issue penalties of up to £20,000 per illegal worker you employ.
In the first three months of 2015 the total penalties issued to businesses for employing illegal workers amounted to over £8,500,000. Therefor it is now critical that your business understands and complies with the complex regulations regarding illegal working. Expatriates.co.uk can put you in touch with an expert team of lawyers who will:
- Understanding the regulations.
- Understand your requirements under those regulations.
- Ensure you have appropriate systems in place to check your employees’ on-going right to work within the UK.
- Assist you if you have recently been fined by the Home Office for employing illegal workers by providing assistance with submitting an objection to the civil penalty compliance team and if necessary lodging an appeal against the civil penalty.
Entrepreneur investing in the UK
Tier 1 (Entrepreneur)
The UK government is pro-actively encouraging this visa and so it is a very good category to enter into. The required investment is a minimum of £200,000 however two applicants can pool this amount of money between them.
This visa is initially granted for three years and applicants can then apply for a two year extension if they can evidence that the funds have been invested and that at least two new jobs have been created from their business activities. Tier 1 entrepreneur holders become eligible to apply for Indefinite Leave to Remain after five years, or three years under the accelerated route.
Tier 1 (Graduate Entrepreneur)
This scheme was introduces in April 2012 and reduces the minimum investment when switching into the Tier 1 Entrepreneur category from £200,000 to £50,000. An approved UK higher education institution must endorse your application.
Tier 1 (Investor)
This category requires a minimum investment of two million pounds within the UK although before November 2014 this was one million pounds. It results in indefinite leave to remain in two to five years depending on the amount invested.