Regardless of whether you have just started to trade or are looking to expand, making the decision to buy or rent your business premises is something that requires a great deal of careful consideration.
In the past, it was seen as a no brainer to buy your own business premises. However, ever since the global economic downturn, renting has been the only option for several entrepreneurs and enterprises. But what are the advantages of both in today’s ever-changing economy and property market?
Advantages of renting your business premises
There are three upsides when you decide to rent a business premise:
1. Easy to relocate
If the business wants to expand, renting allows you to relocate to a more suitable site with the greatest of ease. On the other hand, if you need to scale back your business, renting means you can save money by moving to a smaller property, too. Remember that places like Alligator self-storage can keep any surplus furniture safe while you move.
Although a lot will depend on the nature of the business, a large number of commercial premises cost a lot to buy and require a substantial deposit. But your business does not have to tie up this hefty sum in the property when renting.
3. Diminished responsibility
Should anything go wrong with the premises, such as a power outage or broken central heating system, you won’t need to worry about fixing the problem, as this will be your landlord’s responsibility.
Advantages of buying your business premises
On the other hand, buying a business premise has its own set of advantages:
1. Financial gain
There is a good chance that after purchasing, your business premises will rise in value. Therefore, if you were to sell in the future, you could earn an impressive profit. On top of that, there is always the option of sub-letting your property to other businesses in order to generate a favourable rental income.
2. Tax benefits
By purchasing your business premises, you may qualify for several capital gains tax reliefs that other property investors do not enjoy. What’s more, the interest portion of commercial mortgage repayments is tax-deductible too.
3. Greater security and control
When you negotiate a mortgage for your commercial property, you may be offered a fixed rate, which provides superb security for a specified period of time. Also, you do not need to worry about your landlord making big rent increases, giving you total control over your outgoing finances.
Tips to bear in mind for both buyers and renters
With each option offers its own perks, which one should you choose moving forward? Well, at the end of the day, a lot comes down to the size of your business, the sector or industry you occupy, and your future aspirations. However, here are some tips for both buyers and renters to always bear in mind.
- Short-term rental leases might cost a little bit more, but provide greater flexibility.
- Always try to negotiate for lower rent and better terms from your landlord.
- Look to buy property in government growth areas, as there could be lots of favourable investments happening nearby.
- View a number of different premises before committing to a purchase.
How about you? Do you prefer buying or renting a business premise? Please share your opinion.