If you're on the move, growing your company, or starting from scratch, what commercial property pitfalls should you consider? Simon Jewitt, Director and Head of Commercial Property at Cartmell Shepherd Solicitors, shares some key points to keep in mind before signing on the dotted line.
For most people, buying or renting a home is familiar territory. Commercial property is different. Whether you’re taking a lease on your first premises, buying a building for your business, or investing in property as part of a growth strategy, the legal and financial considerations are often much more complex.
A commercial property isn’t simply somewhere to operate from. It can have a significant impact on your business’s future success, flexibility and profitability. Getting it wrong can lead to unexpected costs, operational restrictions, or legal challenges that are expensive and time-consuming to resolve.
While the location, size and appearance of a property may be the first things that catch your eye, it’s what’s hidden beneath the surface that often matters most.
Leasing commercial premises
Leasing is often the preferred option for new and growing businesses. It generally requires less upfront capital and can offer greater flexibility than purchasing a property outright.
One of the most common mistakes businesses make is waiting until the heads of terms have already been agreed before seeking legal advice. In reality, it’s often beneficial to take advice before that point. These initial discussions form the foundation of the lease and can be difficult to renegotiate later.
There are several key points to consider. How long is the lease term? Are there rent reviews and how are they calculated? Is there a break clause allowing you to leave early if circumstances change? What restrictions apply to the way you use the property?
Repair obligations also deserve careful attention. Many tenants assume they are only responsible for damage caused during their occupation. However, some leases require tenants to put a property into good repair regardless of its condition at the start of the tenancy. Without appropriate safeguards, this can create significant and unexpected costs.
Business owners should also consider security of tenure. Some commercial leases provide protection under the Landlord and Tenant Act 1954, giving tenants the right to request a new lease when the current term expires. Where that protection has been excluded, there may be no automatic right to remain in occupation even if the business is going well.
Buying a commercial property
For businesses looking for long-term stability or an investment opportunity, purchasing may be the right option.
Before committing to a purchase, a thorough survey is essential. Commercial properties can conceal costly issues such as structural defects, damp, asbestos, drainage problems or access limitations. Specialist inspections of services such as electrics, gas and heating systems can also identify issues that may not be immediately visible.
Legal due diligence is equally important. This goes far beyond confirming ownership of the property. Checks should include rights of access, restrictive covenants, planning permissions, building regulations compliance, environmental matters and any existing occupational arrangements that could affect future use or value.
Part or all of commercial properties are often already occupied when being sold. Existing leases, licences or informal occupation arrangements can create ongoing obligations and should be fully investigated before contracts are exchanged.
Thinking ahead
Whether leasing or buying, it pays to think about the future as well as the present.
Businesses evolve. You may need additional space, decide to downsize, sell the business or change the way you operate. Understanding how flexible your arrangements are can prove invaluable later.
For tenants, important questions include whether the lease can be assigned to a buyer if the business is sold, or whether part of the premises can be sublet if needs change.
Owners should focus on keeping the property’s legal position clear and marketable. Properly documented arrangements and welldrafted leases can help protect value and make the property more attractive to future buyers or lenders.
There are also wider regulatory changes to keep on the radar. Energy efficiency requirements for commercial buildings continue to evolve, and landlords and tenants alike should be aware of their obligations and potential future costs when assessing a property.
Making the right decision
There is no one-size-fits-all answer when deciding whether to lease or buy commercial premises. The right choice will depend on your business objectives, finances and long-term plans.
Leasing can provide flexibility and lower upfront costs, while ownership offers greater control and the potential for long-term investment growth. The key is understanding the legal and practical implications before making a commitment.
At Cartmell Shepherd, our Commercial Property team works with businesses across Cumbria, Northumberland and beyond, advising on acquisitions, disposals, leases, landlord and tenant matters, and property aspects of corporate transactions.
Whether you’re considering buying or renting commercial premises, we can help you evaluate your options, avoid common pitfalls and move forward with confidence.
To speak to Simon Jewitt and the team, call 01228 516666 or email enquiries@cartmells.co.uk