Guide to buying a commercial property

kpayne28
3 days ago
4 min read

If you are looking to buy business premises to occupy or rent out, there are various factors to consider before, during, and after purchase. It’s important that you fully understand the legal, financial and practical implications, along with any relevant legislation. We share a guide to buying a commercial property and what you need to know before committing to a purchase.

What to consider when buying commercial property

The term ‘commercial property’ relates to any property not being used for residential purposes. Before agreeing to a purchase, it’s essential that you understand the different property classifications, so you are clear on the permitted use of the property. Otherwise, you run the risk of buying premises that are not legally allowed to be used for your business activities.

Commercial property classifications

In 2020, property classes for commercial buildings were changed and simplified in the UK. We have listed the main ones below:

General industrial (B2) – e.g. factories and manufacturing; for carrying out industrial processes.
Storage or distribution (B8) – applicable to any property acting as a storage facility or a distribution centre.
Hotels and guest houses (C1) – applicable to any property where guests pay to board but where care is not provided.
Residential institutions (C2) – e.g. hospitals, nursing homes and boarding schools; applicable to any property where an element of care is provided.
Commercial and business services (E) – this class applies to a variety of properties, including shops, cafes, restaurants, offices, financial or professional services, leisure facilities or nurseries.
Learning and non-residential institutions (F1) - this class applies to property providing education, exhibiting art or artefacts, a place of worship and courtrooms. This includes schools, libraries, museums, art galleries and churches.
Community (F2) - applicable to places where people gather to watch or participate in a sport or activity. This includes community halls, outdoor sports facilities, swimming pools, ice rinks and certain types of small shops.
No specific class (Sui Generis) – in some instances, there are properties that don’t fall within a particular class and this miscellaneous class is therefore allocated.

The change in property classifications was designed to make variations easier, such as the range of business types that now fall within Class E. In some instances, you might be able to apply for a change of use - speak to our commercial property team for guidance.

Financial and legal considerations

Before committing to a commercial property purchase, you will need to conduct a thorough financial evaluation and carry out due diligence. This will help to ensure the property meets your business needs and you can identify any potential issues.

If you are looking to buy a commercial property with a mortgage, the application process is much more complex than a residential mortgage. Typically, the lender will require a 20% deposit and a loan period between 3 and 25 years. Depending on your business type and eligibility, some lenders may be able to offer you short-term finance to enable you to purchase the property.

There are two main types of commercial mortgage:

Business mortgage – this covers you if you plan to own and operate your business from the premises.
Commercial investment mortgage – this is used for a commercial buy-to-let property and specific criteria is required for this type of mortgage.

Your commercial property purchase will be subject to Stamp Duty Land Tax (SDLT) if the property is valued at £150,000 or over. You may also need to issue a SDLT return for properties valued less than this figure. At the time of writing (May 2025), SDLT is 2% for commercial properties between £150,000 and £250,000, and then 5% over this amount.

It’s important to carry out different types of due diligence when buying a commercial property to identify any potential risks. Your commercial property solicitor will carry out Land Registry Searches and Title investigations, along with Commercial Property Standard Enquiries (CPSEs). Endorsed by the British Property Federation, CPSEs are comprehensive documents that cover various aspects of commercial property due diligence at the pre-contract stage.

Technical due diligence should also be carried out by following guidance issued by The Royal Institution of Chartered Surveyors (RICS). RICs guidance recommends assessing the structural integrity, building services and systems, regulatory compliance, environmental considerations, energy efficiency ratings, and any potential maintenance issues.

Trusted commercial property solicitor in Leicester

Whether it’s your first time or you’ve bought business premises in the past, it’s important to consult a trusted commercial property solicitor. They will be able to advise you and carry out the necessary due diligence needed before you commit to a commercial property purchase.

At Salusbury Harding & Barlow, we have a specialist commercial property team, who will help you negotiate and draft sale agreements and leases. We can also advise you on property development and land use. Our team will explain everything in plain English, including all permitted uses and any restrictions, so you can make an informed decision.

For more guidance on buying a commercial property, get in touch or email: cgooch@shbsolicitors.co.uk to arrange a face-to-face or telephone appointment.