Buying Commercial Property: Shops, Offices and Factories

What this buying commercial property guide covers

Buying a shop, office or factory uses the same legal fee scale as residential property, but almost everything else differs. Buyers who carry their home-buying experience into a commercial matter are often caught out midway.

The express condition must match the use

The title carries an express condition setting out the permitted use: building, commercial, industrial or agricultural. Running a factory on a building-condition lot breaches that condition, and the authorities can act on it.

Check the express condition on the title search before placing a deposit, and make sure it matches what you plan to do. Varying it needs State Authority approval, a premium, and a waiting period that cannot be shortened.

Licences and permits do not pass automatically

This is the most expensive misunderstanding. Buying the building does not mean you inherit the seller business licence, fire permit or environmental approval.

Each has to be applied for afresh in the name of your entity. For a factory that can mean several separate approvals from different authorities, and some take months.

Plan for that period before signing, not after. If your business must be operating by a particular date, that date depends on approvals rather than on handover of keys.

Certificate of Completion and Compliance

Check that the building holds a valid CCC, and that any alteration or extension was approved. A structure built without approval becomes the buyer problem after transfer, not the seller.

For a factory, also check that the existing floor loading and power supply match your operational needs. Upgrading an industrial electricity supply is not a small cost.

Existing tenants

Where the property comes with tenants, the existing tenancy agreements continue to bind you after transfer. Check the terms, the unexpired period, the deposits held, and whether there is a renewal option in the tenant favour.

Ask for copies of every agreement and the deposit position before signing, not after.

Costs that differ from residential

Legal fees follow the Solicitors Remuneration Order 2023, the same as residential. Transfer stamp duty uses the same scale.

What differs is financing. Banks assess commercial property differently, margins are usually lower, and loan tenures shorter. Some banks also require a formal valuation before approving.

Budget as well for commercial assessment, which is higher than residential, and for ongoing compliance costs such as fire inspections.

How long it takes

A bank-financed commercial matter usually runs longer than a residential subsale, because valuation, approvals and compliance checks run in parallel. Plan for four to six months, and longer where a change of condition is involved.

Frequently asked questions about buying commercial property