Guidelines to Commercial Development Land

Commercial development land produces a financial return for its owner in the form of rent. Commercial properties besides making money for its owners are also very important for the economic health of towns and cities. Buying a commercial property can be a time consuming process and there are various things that you need to make yourself aware of before venturing into this area.

The commercial property sector can be split into the following:

• Offices 
• Retail
  • Shops
  • Supermarkets
  • Shopping centres
  • Retail warehouses 
• Industrial
  • Warehouses
  • Factories 
• Leisure
  • Restaurants
  • Pubs
  • Cinemas
  • Gyms
  • Hotels 
• Other
  • Petrol stations
  • Schools etc

 
You can invest in a commercial property directly through a fund that holds the actual property in its portfolio or you can go for the property itself. You can get into the commercial real estate area indirectly, by investing in property companies, developers or house builders etc.

Finding a property when the market conditions are favourable is very important. You do not want to buy a property at the top of the market prices. Here are a few factors that should be taken into consideration while searching for a property.

• Value of commercial property
• Supply of commercial property
• Availability of commercial mortgages
• Rental values etc

Remember, the buyer’s costs usually also include the following:

• Survey Fees
• Valuation/Bank Fees
• Legal Fees
• Stamp Duty
• VAT
• Landlord’s costs in respect of Licence for Alterations if applicable
• Decorating and refurbishing the commercial property
• Insurance
• Maintenance
• Security
• Local authority charges
• Commercial mortgage repayments, if applicable

Planning Permission is an important factor that must be taken into consideration. Before investing buyers must ensure that the property has all the planning consents in place for their intended use. For all the information related to planning uses you can always visit http://www.planningportal.gov.uk which is a Government website for information for such consents and other legal aspects. It is important that you always seek help of a local council or a commercial estate agent on the feasibility.

Commercial property is divided into different classes under the Town and Country Planning Order 1987. This legislation determines how each commercial property is occupied.

 
Here is a list of the different Uses Classes:

1. PART A
   • Class A1. Shops
   • Class A2. Financial and professional services
   • Class A3. Food and drink

PART B

• Class B1. Business
• Class B2. General industrial
• Class B3. Special Industrial Group A
• Class B4. Special Industrial Group B
• Class B5. Special Industrial Group C
• Class B6. Special Industrial Group D
• Class B7. Special Industrial Group E
• Class B8. Storage or distribution

PART C

• Class C1. Hotels and hostels
• Class C2. Residential institutions
• Use as a hospital or nursing home.
• Use as a residential school, college or training centre.
• Class C3. Dwelling houses

PART D

• Class D1. Non-residential institutions
• Class D2. Assembly and leisure

Business rates are often a major consideration for owners of commercial property. Business rates are worked out by multiplying the rateable value of the commercial property - set by the Valuation Office Agency (VOA) – by the Uniform Business Rate (UBR). The VOA’s valuations are revised every five years. You can get the business rates from your local council every year. 

Energy costs are an important consideration too and the vendor can give you an Energy Performance Certificate which provides guidance on how energy efficient the commercial property for sale is. This certificate is valid for 10 years.

Securing a loan to help boost your buying position is another important factor. A commercial mortgage is a common form of finance in a commercial property deal. Commercial mortgages typically range from three to 25 years. You can always go for professional help in order to explore your loan options.

Legal contracts are the final important aspect for which you will have to seek the service of a legal expert. Once both the parties agree to the terms and conditions of the contract, the deal can go ahead smoothly.

Contact our land and property developement department for help.