Advice when buying the freehold of a
business premises you already lease and
Whether you are buying the freehold of a business premises you are already leasing or buying the freehold or leasehold of a new business premises we can provide help and advice in the form of building surveys, structural surveys, schedule of conditions, structural reports, independent valuations, property surveys, engineers reports, specific defects report or any other property matters . Please free phone 1stAssociated.co.uk on 0800 298 5424 for a friendly chat with one of our surveyors.
Buying the freehold of your business premises
We recently dealt with the owner of a beauticians and hairdressing salon who had a leasehold of a property whose business was doing reasonably well and had discovered that although she had been paying her rent to the landlord the bank had started repossession proceedings against the landlord and she was in danger of losing her business.
Agree a price
She therefore approached the landlord with regard to buying the property and they had agreed a price to buy the freehold.
The owner of the salon then approached her business manager at the bank with regard to a commercial mortgage on the property. Following discussions the bank agreed to support her with regard to her getting a commercial mortgage on the property and asked a Commercial Valuation Surveyor to come and value the property.
The Commercial Valuation Surveyor was from a reputable company and was also regulated by the Royal Institution of Chartered Surveyors and duly produced a report. The difficulty is that any valuer carrying out a commercial valuation has to look at other transactions. Unfortunately there hadn't been that many comparable transactions in the area. The valuation that came back was considered low by both the landlord and the tenant.
What was surprising most of all was the structural problems that the Commercial Valuation Surveyor advised he thought were occurring at the property and that they should have a Charted Building Surveyor prepare a report and advise.
Always have a Structural Survey
This is where we became involved with the leaseholder and the freeholder wishing us to have a look at the property and advise on what we believed was the market value, not what the bank would lend on it which can be quite different in our opinion and also for us to prepare a structural report on the property and comment on the best way to resolve the structural problems in the property if indeed there were any.
Difference between a Mortgage Valuation and an Independent Valuation
Looking at these two areas separately the valuation as with many valuations should have included in our opinion other elements although we are aware that the normal practice is not to include these.
Equally both parties also felt that the property had been undervalued due to it being within a specialist shopping area and other shops that it had been compared with not being in the same area. We looked at this and we also looked at market rents and came back with a value considerably higher than the banks valuation surveyor in this particular instance which the leaseholder and freeholder are now taking back to the bank.
Problems identified during our survey which were not picked up by the Commercial Valuation Surveyor:
Interestingly the structural problem that the valuation surveyor had identified wasn't the main issue in the property as we often find. We carried out a full structural survey on the entire property which also identified:
1) Problems in the roof as commercial valuation surveyors don't go in the roof
2) Problems with the drains as they don't lift up the drains
Also from our experience and knowledge of this type of structure we could see there were also problems with the chimneys and parapet walls allowing water into the property and also a problem with the electrics.
These items were also added into the equation of the valuation which the freeholder and leaseholder are happy to work together on having seen the evidence of and agree a price to sell the property at which they felt truly reflected the work that had been carried out by the leaseholder and the repair work necessary and the true market value of the property.
Do I need a Surveyor or a Structural Engineer?
Many people find it confusing as to whether they need a Structural Engineer or a Surveyor. We would say you need someone who is qualified and experienced with the type of problem you have.
Meet the building surveyor at the property
We would recommend if you have the time available and can get to the property whilst the survey is being carried out that you meet your independent surveyor who will be more than happy to talk to you about any concerns and possible problems that you think the property may have together with any potential alterations and improvements that you may be looking to carry out to the property. We will, of course, be happy to speak to you about the survey report once it has been completed.
Why have an independent building survey?
Always have an independent building survey as this will highlight any property problems. Caveat emptor means buyer beware and is why we recommend that you have a building survey to find out if there are any problems within the property; the estate agent certainly will not advise you of any. Remember the building Surveyor that you employ will be the only person working for you with your interests at heart.
We can email you examples of our easy to read building survey reports
We pride ourselves on our professional standard and easy to read reports written in plain English which we have been carrying out for many years on every age, type and style of commercial and residential properties throughout the UK.
If you are thinking of buying a property whether it is a property that you are not very familiar with or as in this case you are buying the freehold of a property that you are currently leasing we would urge that you have a Structural Survey carried out.
Please call us on free phone us for a friendly chat on 0800 298 5424 . We would be happy to email you several examples of our tailor made reports so you can see for yourself the quality of our reports.
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