Business Relocation Finance

In the commercial sector, it’s common to see businesses electing to lease premises rather than buy them outright. Over 57% of commercial property in the UK is owned by investors rather than owner-occupiers, illustrating the gap between ownership and tenancy. 

Business owners often find themselves renting premises rather than buying them due to the high up-front costs associated with a property. One of the key challenges to your cash flow is in finding the deposit needed for commercial mortgages, which can often be far higher than in a residential mortgage. 

It may surprise you to learn that relocating your business and purchasing a property may be more achievable than you thought – especially if you have a stable tenancy history and can demonstrate a history of reliable rent payments and stable operating cash flow. In such cases, a lender can offer a better LTV than you may expect, reducing the amount you have to pay up-front as a deposit. 

Getting a commercial mortgage that works for you will require finding the appropriate lender, preparing your application and then negotiating the right rates and terms to suit your needs. Work with Rangewell and we’ll guide you through the process, find the best lender and negotiate a deal on your behalf to help you relocate your business and invest in its future by purchasing a business property.

Leasing vs buying

If you’re considering relocating and purchasing a new property, it’s worth quickly reviewing the pros and cons of leasing and buying to determine which option is right for you. 

Leasing

When you lease a commercial property, you’re committing to what is usually a long-term relationship with your landlord. The logistics of setting up a business in a premises means that most owners tend to favour staying in one unit provided the rental costs reflect the level of service they receive.

However, this can lead to a business owner paying more than they should or hanging on to premises they don’t get the best value from just because they, or their customers, are familiar with it. 

Before you decide whether to lease or buy, remember the following: 

Advantages

• A business can move in and start operating from a rental property faster as the process won’t take as long as a purchase. 
• Most landlords who want to succeed will equip their premises with the essentials your business needs, such as high speed internet, good electrical design to facilitate IT set-ups, office layouts etc. This reduces the work you’ll have to do as a tenant and lets you get start operating immediately.
• You don’t need to provide a large deposit like you do in a commercial mortgage, making rental attractive to businesses that don’t have large capital reserves. 

Disadvantages

• Your tenancy will be subject to various lease conditions that may ask you to pay for repairs or maintenance etc. Make sure you review lease terms before agreeing. 
• You won’t benefit from any increases in property value caused by market changes.
• Rent can increase with little to no warning.
• Landlords may be able to evict your business with minimal notice, causing immense disruption to your operations. 

Buying premises

The most obvious benefit to owning your business’ premises is that you’re acquiring a new source of investment that will grow in value and ultimately return a profit. However, there are plenty of other considerations you need to take into account, including: 

Advantages

• You’ll have more control over your business’ financial outgoings and will be able to negotiate for fixed interest rates over longer periods of time compared to the unpredictability of rent. 
• You have the freedom to renovate and customise your property however you like, subject to planning considerations. 
• There are some tax advantages associated with commercial mortgage repayments, though you’ll need to consult your accountant. 

Disadvantages

• If you can’t get a fixed rate mortgage, variable rates can be more unpredictable and can impair your cash flow. 
• Commercial mortgages tend to require large deposits, which means having to provide a large chunk of capital up-front. 
• Property prices don’t always rise – you may lose money on the purchase.

Financing relocation costs

In addition to securing a mortgage for your commercial property acquisition, you may also need to finance the costs associated with relocating your business. This may include paying staff salaries during any downtime or paying for outfitting or equipment. 

Regardless of what type of costs you face, Rangewell can help. We offer support for all forms of financing, including asset finance and general business loans.

Arrange business relocation finance today 

Don’t let a lack of deposit hold you back. Get the commercial mortgage you need to purchase your property and relocate your business, as well as any further finance you may need to fund the associated costs – all with Rangewell’s help. Talk to our team to learn more.