Frequently Asked Questions
By far, finding a private cash buyer is likely to save you significant time.
This is because these buyers are able to bypass the often complicated commercial property finance process.
Much will depend on the size and scope of the transaction as many buyers may not be in a position to fund substantial sums of money.
Relative to residential sales, you should also be prepared to wait longer as buyers (and their conveyancers) will want to engage in the extra due diligence required when dealing with commercial property.
When selling commercial properties on the open market or privately, the more information you can provide in advance the better.
Below are the main documents and pieces of information we would suggest collating:
- Commercial property leases, rental receivables, proof of income stream stability and other associated documentation;
- Information on termination dates, break clauses, rent reviews, transfer or charging restrictions, service charges, ground rents, business license / rates schedules, no evidence of criminal activity on premises, insurance provisions, forfeiture (termination) rights;
- Proof of good covenant strength. This includes financial status (solvency) and creditworthiness of occupational tenants (through independently audited accounts / financial assessments / payment records / net cash flow breakdowns);
- Guarantor information – including Authorised Guaranteed Agreements (AGAs) and any confirmation of sureties;
- Proof of compliance with covenants / consents / permits / easements / rights of way;
- Title checks (ownership, boundaries, 1st/2nd/3rd charges, encumbrances);
- Confirmation of no defects on title;
- Confirmation of type of lease – such as full repairing and insuring (FRI);
- Maintenance / defect resolution costs and any major works undertaken;
- Current ownership structure (personal, company or trust);
- Profit and loss of any existing companies or special purpose vehicles (via balance sheet provision);
- Any evidence of comparable commercial rents at other similar properties in the local area;
- Demand for the specific type of commercial property. For example, retail property is currently decreasing in popularity compared to industrial properties and warehouse space. At the same time, there are many buyers who are exploring opportunities to convert commercial properties into residential under Permitted Development Rights (PDRs);
- Vacancy rates for the last 5 to 10 years;
- Any evidence of local cap rates / local commercial real estate valuations;
- Local planning and redevelopment proposals – particularly transport, schools, hospitals and other core infrastructure;
- Conveyancing enquiry responses;
- Condition of the property (the auctioneer will take photos and floorplans but most buyers will want a closer look);
- Planning and building regulation documentation (including any lapsed permissions / change of use applications);
- Evidence of enforcement notices / actions;
- Surveys (building, structural, site, mechanical, electrical, measurement, environmental/ ground / rights of light);
- Insurance policies in place (+ payment confirmations / any claims made in recent years);
- Current or pending legislation that could affect the property (including the Land and Tenant Act, Law of Property Act, Climate Change Act, Energy Act);
- Current or pending regulation that could affect the property (health & safety, fire / asbestos risk);
- Tax liabilities – particularly related to VAT;
- Whether the sale will be a transfer of ongoing concern and potential capital allowances.
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