Is It Better to Rent or Buy Commercial Space?
Whether you are planning to expand your business into new neighbourhoods in London, or would simply like to look into the possibility of relocating, deciding whether to rent or buy that commercial space is a difficult one. At Saracen Interiors, we specialise in office relocation along with fit-out and design services. And we can help you make the right decision.
Our network includes some of the most-respected commercial agents in London, and we’re happy to place our clients in contact with them to make the process of securing new property as painless as possible. Given the nature of our work, we also have a good grasp of the pros and cons of buying versus renting commercial space, and we thought we’d share a few of the advantages of each below:
Advantages of Renting Commercial Space
Most businesses looking for commercial space in London prefer to rent rather than buy. And in many cases, this is the mode of action that we recommend at Saracen Interiors. Over the years, we’ve developed strong professional relationships with the top commercial estate agents in London, and we’re confident in our ability to help our clients find a rental property that suits their locational needs, company culture and budget.
There are several advantages to renting commercial space:
- Bottom-line considerations: Renting a property is usually the more viable option for all but the biggest companies. When you rent, there is no need to come up with a large down payment that will end up hobbling the company in terms of critical cash flow and liquidity. For small and medium-sized companies, liquid capital is essential to ongoing operations.
- Freedom: When you rent a property, the only limiting factor is your lease. If the company grows faster than expected, relocating or expanding is a viable option. This isn’t necessarily the case when you’ve purchased the property, as relocating will most likely require selling first. Likewise, expanding is only possible if you’re fortunate enough to be able procure connecting property. It bears mentioning that competent commercial agents in London will work to ascertain the likelihood of a future need to expand and find a property that allows for this.
- Reduced responsibility: Tenants are not expected to look after the maintenance and upkeep of the building they occupy. This frees you and your team up to focus on operational considerations, leaving general maintenance – everything from washing the windows to repairing the central heating – to the actual property owners. For smaller companies, hiring a full maintenance crew is rarely an option, so it makes sense to rent and leave these details to the property owner.
- Protection: In this case, we’re talking specifically about protection from market fluctuations. When you buy the property, your company is financially leveraged and exposed to the market. Falling property prices can have serious repercussions when a significant amount of company assets are tied up in real estate. The same can affect renters in terms of rising rent, though extended lease terms protect against this. Likewise, the option to relocate is always on the table when you’ve already been introduced to a reputable commercial estate agent in London.
Advantages of Buying Commercial Space
Buying commercial property or office space in which to operate is considerably less common, but it does have its advantages. However, as we mentioned above, this is usually only viable for large companies – or for those with an exceptionally large amount of liquid capital. But if your company can truly afford to purchase commercial space without hindering its operations, then the commercial estate agents in Central London will tell you that there are many reasons to consider doing so.
Here are the primary advantages of buying commercial space:
- Equity: As with any property purchase, buying your own commercial space means that you can either let it out now or benefit later from its sale. But as mentioned, equity is only worth something if you have enough liquid capital on hand to manage and grow operations.
- Free reign: Different landlords have different policies, but it’s safe to say that you’ll enjoy more freedom and flexibility with how to fit out, refurbish and improve upon the space when your company owns it. You’re also free from lease terms, which means you can move on from the space whenever you please without suffering any penalty.
- Assurance: When the company takes out a loan to purchase commercial space, it enjoys assurances in terms of how much the monthly payments are going to be over the long run. Interest rates may fluctuate – though this depends upon the type of loan and certainly won’t be comparable to the pinch experienced by rising rents further down the road.
- Tax advantages: Tax law in the UK is far from set in stone, and we’ve seen substantial changes introduced in the past few years, with more to come in the near future. However, there are likely to be deductions that you can claim if you purchase the property. For example, landlords are able to deduct interest paid on mortgages for properties that they rent out. Obviously, the specifics will depend greatly on a basket of variables. But this is an area in which knowledgeable commercial agents in London can advise you.
Trust the Experts in London
Deciding whether to buy or rent commercial property is no small task – especially in London, where property prices are undeniably high. Due to the nature of our work, we’re well aware of how seriously companies take this decision. That’s why we’ve made a point of meeting and connecting with the best commercial estate agents in London. This allows us to offer an even more comprehensive set of solutions for clients looking to expand or relocate.
Determining the best course of action requires careful deliberation, and it helps to bring the experts on board as early as possible. With that in mind, if you’re considering relocating your business to London or simply expanding into new commercial space, contact Saracen Interiors. Beyond helping you with the actual logistics of your move and fit-out, we can also put you in touch with a commercial agent in London that can help you to assess your needs and make the best decision.