Purchasing a property for your manufacturing business provides stability and investments for the future and removes the hassle of gaining a landlord's consent for any alterations you may want to make to the premises.
You may be confident that this is the appropriate next step for your business, but there are things you should be aware of and consider before making the long-term commitment of purchasing a commercial property.
Our Manufacturing and Commercial Property Solicitors guide you through everything you need to know before purchasing a premises for your manufacturing business.
Do you have a solid business plan in place?
It is important to have a realistic business plan in place and be confident in the trajectory of your business over the upcoming years.
This should form the foundations of your search for a property, as purchasing a property that proves too small and does not accommodate your future growth can stunt your business.
On the other hand, overestimating your growth and purchasing a property you do not use at full capacity can create unnecessary costs down the line, such as expensive utility bills for space that are not being used and that your income may not be able to support.
If you find yourself in either position, it is uncertain how long it would take to sell your property and move your operations into a more suitable fit.
This could harm your business and result in you losing valuable income.
If you are in the earlier stages of your operations, you may want to consider leasing a commercial property instead to provide more flexibility.
Suitability of the premises
More than just the size of the premises determines whether a property suits your operations.
You may find a property previously owned by manufacturers and assume it will be a good fit for your needs, too.
To establish this, you will need to consider the requirements of your operations regarding the equipment and machinery used and whether the building has the infrastructure to accommodate your specific requirements.
A structural survey will enable you to understand this in more detail and determine if the premises are right for your intended use.
It is essential to make all of the proper enquiries before you exchange contracts to avoid ending up with a property you cannot properly operate.
There are other, more obvious considerations, such as whether the premises will meet health and safety requirements, but this should extend to considering how many exits the building has and if there is appropriate access for workers or any visitors you may have to the property.
Location is another factor vital to your manufacturing operations' success.
You should consider the proximity of the forms of transport you are looking to rely on and if the premises are easily accessible when using transport, such as if delivery vehicles can access the property and load and unload as they may need.
Sustainability and energy efficiency
It is important to consider sustainability and the energy efficiency of your new property, as this can have costly implications.
An Energy Performance Certificate (EPC) rates the energy efficiency of a property using an A-G grading system.
Suppose you are aware that your specific operations use a lot of energy.
In that case, prioritising a property with a higher rating may be worth prioritising, as this will result in lower utility bills.
However, sellers know how attractive this is to buyers, meaning a higher EPC rating often comes with a higher purchase price.
It is also worth noting that the government intends that by 2030, all commercial properties will have a minimum rating of 'B', a significant jump from the current requirement of an 'E' rating.
Therefore, purchasing a property with a rating already at 'B' or above is advisable, so this is not a future concern.
Sustainability can also improve your company's reputation, a quality that is becoming increasingly attractive to potential employees; therefore, prioritising this when selecting a property may contribute to boosting your employee retention.
This could significantly impact your company, as certain areas within the manufacturing industry are facing a shortage of skilled workers.
If you believe your operations fall within these areas, this is even more reason to prioritise sustainability in your search for a property.
Understanding Stamp Duty Land Tax & VAT
Selling a commercial property is generally exempt from VAT, but you should be mindful that sellers can charge VAT at the standard rate of 20%.
This is worth considering when enquiring about properties and organising your finances in preparation for purchase.
If this is your first purchase of a commercial property, it is useful to understand the SDLT implications of your purchase in advance, as the tax must be paid within 14 days after completion.
This allows you to have the correct funds and avoid late penalties.
SDLT will be payable on all freehold commercial property purchases and transfers for consideration of over £150,000.
- 2% will be payable on the amounts of £150,001 to £250,000
- 5% will be payable on the amount exceeding £250,000
It is important to note that an SDLT return must be submitted even if no SDLT is payable unless the purchase price is less than £40,000.
Contact Our Manufacturing Solicitors
If you're thinking of purchasing a commercial property for your manufacturing business, get in touch with our Manufacturing and Commercial Property team for advice on:
01619414000
Latest Myerson Manufacturing News
Buying Industrial Premises for Manufacturing: A Practical Legal Guide
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...
Read Blog
What Due Diligence Is Required for a Commercial Property Purchase?
Purchasing a commercial property can deliver strong returns, whether through rental income received from tenants or long-term capital growth. It does, however, entail a range of legal and practical risks that, if not addressed and managed before exchange of contracts, can significantly affect the property’s value. Our Commercial Property team...
Read Blog
CO₂ Shortages: Key Legal and Contractual Issues for Manufacturers
Current geopolitical tensions in the Gulf region have renewed concerns about the resilience of global energy and industrial supply chains, increasing the risk of disruption to key inputs such as carbon dioxide. While the UK has recently agreed to invest £100 million to reopen a carbon dioxide production plant on Teesside as part of a contingency...
Read Blog
Navigating UK Immigration Changes: What Manufacturers Need to Know
For many manufacturing businesses, recruiting and retaining skilled international talent has become increasingly challenging. In this Q&A, Robert Brothers, Head of Myerson's Manufacturing Sector, speaks with immigration specialist Mohammed Hafejee, Partner at Latitude Law, to explore how recent changes to the UK’s immigration rules are affecting...
Read Blog
Ring-Fencing Risk in Manufacturing: Is It Time for a Holding Company?
Manufacturing is one of the most asset-heavy and risk-exposed sectors in the UK. When something goes wrong for the business, the financial consequences can be significant. Despite the risks associated with a manufacturing business, many still operate through a single limited company that owns everything, from the trading operation to properties...
Read Blog
Webinar: Industrial Property and Energy Efficiency: Key Legal Issues for Manufacturing Tenants
The manufacturing sector in England and Wales is undergoing rapid change. With rising energy prices, tightening sustainability regulations and increasing property-related costs, manufacturers are facing operational pressures that cannot be ignored. As Big Energy Saving Week (17–23 January) shines a spotlight on improving efficiency and reducing...
Watch Webinar