The bulk of the UK’s buildings are residential homes yet the value of commercial property was £883 billion in 2016, accounting for 13 per cent of the value of all buildings. For an investor, commercial property can be an appealing prospect with yields in some areas reaching up to 12 per cent a year.
Whether it be an industrial warehouse, an office block, a leisure space or a shopping centre, commercial valuations are not a simple matter. Just as you would have a residential property valued, it is best to have commercial property valued by an agent. However, the way in which the value is determined is very different.
How is a commercial property valued?
Having an accurate valuation allows you to make informed financial decisions and understand risks around buying a commercial property effectively.
Valuations must be made based on commercial insight, market data, knowledge of the local area and financial information about the commercial property. Commercial property values are often dependent upon the current economy, rental income, quality of tenant and longevity of the current commercial lease, and location.
Standard valuation practices for retail, office and industrial premises are governed by the Royal Institute of Chartered Surveyors’ (RICS) Red Book. The RICS Red Book promotes high standards and ensures the delivery of credible, transparent and high-quality reports.
For this reason, we recommend using a local agent that is a RICS member to do the valuation as they will have an excellent knowledge of the area the commercial property is in. They will visit the property and may be able to give you a guide price straight away.
How do commercial property solicitors help when buying?
Once the commercial property has been valued and you decide to go ahead with the purchase, a commercial property solicitor is able to provide a supporting hand for a number of things through the buying process.
Commercial agents and commercial property solicitors work together to ensure an efficient purchase. Our commercial property team at Bray & Bray oversee your commercial sale by:
- Instructing property searches and reporting you in relation to the same;
- Reviewing the commercial property sale agreement and the necessary documentation to sent from the seller’s solicitor
- Reviewing replies to standard enquiries and raising any specific enquiries required
- Liaising with your lender if applicable, in relation to any mortgage
- Preparing and filing the SDLT Return with HMRC
- Arranging completion and transferring funds
Perhaps most importantly, a solicitor is there to provide assistance throughout the process, so feel free to ask them any questions as and when they crop up.
The commercial property selling process
The agent will provide a valuation whilst a commercial property solicitor will guide through the paperwork and finalise the property transfer. As soon as the transaction is underway, the solicitor’s work begins.
Initially, they will instruct the property searches. The early stages also include an investigation of the legal title to the commercial property and the review of the contract for sale.
As long as the contract is agreed with the seller, you will pay over the decided deposit. Drafting the transfer deed and drawing down the mortgage will be the final acts before the commercial property transaction is completed.
Leicestershire commercial property solicitors
If you are considering selling a commercial property and need an expert commercial property solicitor to answer any questions that you may have, call us at our offices in Leicester, Hinckley and Market Harborough.
Leicester: 0116 254 8871
Hinckley: 01455 639 900
Market Harborough: 01858 467 181