Most small businesses do not have the capital available to purchase their premises outright. Even if you can borrow to finance the purchase, you may feel that you have better uses for your capital.
If you do choose to buy, it can have several advantages:
- Have control of your own premises and stay there as long as you like
- Choose to occupy the premises yourself, rent them to someone else, or sell them
- Your costs are relatively fixed, particularly if you have a fixed-rate mortgage, whereas rents can increase significantly over time
- Make alterations to the premises to suit yourself - subject to legal restrictions
- Over the long term, the value of the property may rise
Against this, you have to weigh the disadvantages. Buying property is an expensive and often time-consuming process, involving significant professional fees and stamp duty. You'll also be responsible for all the maintenance and repairs. If your needs change, selling the property can be difficult and expensive, and you might find that the value has fallen.
You may be able to claim capital allowances towards the cost of renovating or converting your business premises. Legal advice is strongly recommended if you are buying premises. You'll also need to be aware of your legal obligations. For example, you'll need to ensure that the premises meet health and safety standards.
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