For a manufacturing business, owning a site rather than leasing one offers several benefits.
Although the due diligence required may be lengthy and the initial expense large, purchasing a site can give a buyer both more flexibility and certainty, without having to obtain a landlord's consent or the uncertainty that arises from lease renewals or rent increases.
Our Manufacturing and Commercial Property Lawyers discuss the legal and practical considerations when purchasing a site for manufacturing purposes, and how this differs from purchasing other commercial properties.
Finding an appropriate site
Before legal due diligence begins or solicitors are instructed, a buyer should consider whether a particular site is commercially and operationally suitable for their current business needs and future expansion plans.
Consideration should be given to:
- The property’s location and access routes are important, as manufacturing sites inevitably require access for large transportation vehicles, whether for suppliers or distributors. Ensuring adequate access and good transport links can support a business's growth.
- The physical characteristics of the property: does it physically accommodate current manufacturing needs in its size and design, and are the ancillary features of the property, such as loading and storage areas or suitable parking?
- The surrounding area, would neighbouring properties suit business needs if they were to be marketed for sale at a time when the business was expanding? Is there a residential development close by that may attract complaints due to noise production or an increase in activity?
By taking into consideration the factors above, buyers can reduce the risk of entering into negotiations to purchase premises that do not meet operational needs, before solicitors are instructed and fees are incurred.
Property Due Diligence
Once a buyer has found a site it views as appropriate for its current and future needs, it is essential that the buyer be able to lawfully operate its proposed processes from that site.
When comparing the purchase of a manufacturing site to a standard commercial property purchase, such as a property to be used as an office, the due diligence process will be more thorough due to the risks associated and compliance required with particular manufacturing processes.
The due diligence process will typically include:
Title investigation
The title to the property will be examined to ensure the seller lawfully owns the property and has the right to sell it, and to determine whether there are any restrictions, covenants, easements, rights benefiting neighbouring land, charges, or boundary issues that could interfere with the planned manufacturing activities.
Property searches
Property searches are essential for a manufacturing site as they can reveal: potential contamination or flood risks, uncover potential environmental liability, confirm that the property is connected to mains water and sewerage, whether roads serving the property are publicly adopted, planning permissions for the property, building regulations approvals, which are all important considerations prior to a purchase.
The results of environmental searches are particularly important for a manufacturing site as liability for contaminated land that has occurred as a result of previous manufacturing activities at a site can extend to current owners of properties, even where they were not owners or occupiers when the contaminating event occurred.
Planning considerations
A manufacturing site will be useless if it cannot be used lawfully for its intended purpose.
It is important to review any existing planning permissions to check they align with intended use, consider whether the property is or has been subject to any enforcement action and if appropriate building regulation consents have been granted.
Planning conditions may restrict operating hours, noise levels or movement of vehicles and can have an impact on the processes that a business plans to carry out.
Future development potential
An important consideration for buyers is, as their offering grows, does the site have the potential for development, especially if it is intended to be a base for all operation.
The above factors will all play a part in painting a picture of the site's ability to be developed, but buyers may want to know from the outset of a transaction whether there are any legal or practical barriers to expansion.
EPC Rating and Energy Efficiency
For manufacturers, energy-related costs represent a significant expense.
Buyers should therefore consider the Energy Performance Certificate (EPC) rating of a property and the potential impact this may have on running costs.
While an EPC does not paint a full picture of a property’s energy costs, it does provide insight by way of a comparison between similar properties when considering the financial implications of potentially energy-intensive manufacturing processes.
EPCs are accompanied by recommendation reports, detailing ways a property can improve its energy efficiency by taking such steps as improving insulation or installing more efficient lighting systems.
These recommendations should, however, be considered by way of a cost-benefit analysis, ensuring that the up-front expenditure will lead to savings in the long run.
Financial Considerations
It is important to consider some of the financial aspects of a potential transaction.
If the purchase is to be funded by way of a mortgage, the interest rate will typically be higher and the term shorter than a residential mortgage due to the risk for the lender.
The buyer will be liable for the fees incurred by the lender where it instructs its own solicitor.
The lender will also conduct its own due diligence on the property, and it is important to understand the lender’s requirements early in a transaction to ensure compliance does not delay it.
On purchasing a site, the buyer will be liable for tax by way of Stamp Duty Land Tax, the rate of tax payable will depend on the purchase price.
- Up to £150,000: 0%
- From £150,001 to £250,000: 2%
- Above £250,000: 5%
Contact Our Team
Contact one of our Commercial Property solicitors if you require advice or support in relation to the purchase of a manufacturing site
0161 941 4000
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Josh Durkin
Trainee Solicitor
Josh joined Myerson as a Trainee Solicitor in September 2025. Prior to joining the firm, Josh obtained his law degree from the University of Sheffield, then completed his LPC LLM at the University of Law in Manchester in 2024, achieving a Distinction.
About Josh Durkin