Quick Answer
To buy commercial property in the UK, start by deciding why you’re buying (for your own business or as an investment), what type of property you need and where. Then work out your full budget. Lenders usually want a deposit of 25% to 40%, and you’ll also pay stamp duty at non-residential rates, possibly VAT, legal and survey fees, and lender costs. Once you’ve found a property, agree heads of terms, instruct a solicitor and surveyor, arrange finance, and complete due diligence on the title, planning, condition, leases and environmental risks before exchanging contracts. A straightforward purchase typically takes two to four months. Business owners can sometimes buy their premises through a pension scheme, which can be very tax-efficient. A local commercial agent can find the right property, negotiate the price and keep the deal on track.
Your First Commercial Property: Exciting, but Different
Buying your first commercial property is a big milestone. Perhaps you’re tired of paying rent and want to own your premises. Perhaps you’re ready to make your first property investment.
Either way, it’s not like buying a house. The finance works differently, the tax is different, the legal checks go deeper, and the value often depends on things a homebuyer never thinks about, like lease terms and planning use.
Think of it like moving from driving a car to driving a van. The basics are familiar, but the size, the rules and the consequences of getting it wrong are all bigger. A bit of preparation makes all the difference.
At Rory Mack Associates, we’ve helped first-time buyers and seasoned investors buy commercial property across Stoke-on-Trent, Staffordshire, Cheshire and Shropshire since 1992. This guide walks you through every step.
Before You Buy
1. Be clear why you’re buying
- For your own business: you want premises that suit how you work now and as you grow. Owning gives you control and an asset, but ties up capital. Our guide to buying vs leasing commercial property helps you decide.
- As an investment: you want income and long-term growth. The tenant, the lease and the yield matter as much as the building. Read our guide to investing in commercial property first.
2. Choose the right type of property
Offices, shops, industrial units and mixed-use buildings all behave differently, and each needs the right planning use class. Ask yourself:
- Will it suit your business, or the tenants you want to attract?
- Can it be extended or adapted as needs change?
- Is there parking, loading and good access?
- Could part of it be let out to bring in extra income?
Our guide to types of commercial property explains the options and use classes.
3. Get the location right
For a business, think about customers, staff, suppliers and visibility. For an investment, think about tenant demand, vacancy rates and local plans. An established area is lower risk, while an up-and-coming area may offer more growth. Our guide to choosing the right location for your business covers the essentials.
Working Out Your Full Budget
The purchase price is only the start.
The deposit and finance
Commercial mortgages work differently from home loans. Lenders typically ask for a deposit of 25% to 40%, with owner-occupiers usually able to borrow a little more than investors. Rates are often higher than residential mortgages, and lenders look closely at your business accounts or the strength of the tenant. Speak to a specialist commercial mortgage broker early.
Stamp duty land tax
Commercial property in England pays stamp duty at non-residential rates:
| Part of the price | Rate |
| Up to £150,000 | 0% |
| £150,001 to £250,000 | 2% |
| Above £250,000 | 5% |
So on a £300,000 unit, stamp duty would be £4,500.
VAT
This catches many first-time buyers out. If the seller has “opted to tax” the building, VAT at 20% is added to the price. If you’re VAT-registered and make the same election, you can usually reclaim it, but you still need to fund it in the meantime, and stamp duty is charged on the VAT-inclusive price. Buying a let property can often be treated as a transfer of a going concern, with no VAT charged, if the conditions are met. Brand new commercial buildings usually carry VAT. Always ask about VAT before you make an offer.
Other costs
- Solicitor’s fees and searches
- A building survey, and an environmental report where needed
- A valuation for the lender, plus arrangement and broker fees
- Repairs, fit-out or refurbishment
- Business rates, insurance and running costs from completion
- Ongoing maintenance and compliance
Our guide to the hidden costs of commercial property ownership helps you plan for these.
Buying Through Your Pension
If you own a business, you may be able to buy your premises through a Self-Invested Personal Pension (SIPP) or a Small Self-Administered Scheme (SSAS). It’s one of the most tax-efficient ways to own commercial property.
Here’s how it typically works:
- The pension buys the property, using its funds and sometimes borrowing (a SIPP can usually borrow up to 50% of its net value).
- Your business leases the property from the pension and pays a market rent.
- The rent is usually a deductible business expense for your company.
- The rent received by the pension is free of income tax, and any gain when the pension sells is free of capital gains tax.
In effect, your business pays rent into your own retirement fund instead of to a landlord.
There are rules. The property must be commercial (pensions can’t hold most residential property), the rent must be at market rate, and the deal must be at arm’s length. From April 2027, most unused pension funds are also due to count towards your estate for inheritance tax, which may affect long-term plans. Always take advice from a regulated financial adviser and your pension provider before going down this route.
Our commercial valuations team regularly provides the independent valuations and market rent assessments that pension providers require.
Tax Reliefs Worth Knowing
Owning commercial property can bring tax benefits that renting doesn’t. Ask your accountant about:
- Capital allowances: relief on qualifying fixtures such as heating, lighting, lifts and electrics. When you buy, make sure the seller’s claims and the value of the fixtures are agreed in the contract, or you may lose the right to claim.
- Structures and buildings allowance: relief on the cost of constructing or renovating commercial buildings, for qualifying work since October 2018.
- Land remediation relief: for companies cleaning up contaminated or derelict land.
- Interest relief: commercial landlords can deduct finance costs in full against rental income.
For the latest changes to capital allowances and property income tax, read our guide to commercial property tax planning before year-end.
This section is general information, not tax or financial advice.
The Buying Process, Step by Step
- Get your finance in principle. Know what you can borrow before you start viewing.
- Search and view. Register with local commercial agents, as many properties sell before they’re widely advertised. Browse our available commercial properties.
- Make an offer. Base it on evidence, not the asking price. A commercial valuation helps if you’re unsure.
- Agree heads of terms. The price, what’s included, VAT, timescales and any conditions, set out for both sides’ solicitors.
- Instruct your team. A solicitor experienced in commercial property, a surveyor, your broker and your accountant.
- Due diligence. Legal, physical and financial checks, covered below.
- Mortgage offer. The lender’s valuation and final approval.
- Exchange contracts. You pay the deposit and the deal becomes legally binding.
- Complete. The balance is paid, you get the keys and stamp duty is due within 14 days.
A straightforward purchase usually takes two to four months. If you buy at auction, contracts are exchanged on the fall of the hammer and completion usually follows within about 28 days, so all your checks and finance must be in place before bidding.
Due diligence: what to check
- Title: who owns it, rights of way, restrictive covenants and boundaries
- Planning: the use class, planning history and any enforcement issues
- Condition: a building survey, especially for older buildings or anything with a flat roof. See why you need a commercial property survey
- Leases: for let property, the lease terms, rent, tenant’s financial strength and arrears
- Environmental: contamination, flood risk and any previous industrial use
- Compliance: EPC rating, asbestos register, fire risk assessment
- Running costs: business rates, service charges and insurance
Our commercial property due diligence checklist goes into every step in detail.
Negotiating
Use your research to justify your offer. As well as the price, you may be able to negotiate the seller fixing defects, an allowance for repairs, a longer completion to suit your finance, or for fixtures and fittings to be included.
A Real-World Example
Picture a family engineering business that has rented a 5,000 square foot unit in Stoke-on-Trent for ten years. The landlord offers to sell it to them for £350,000.
Their accountant suggests buying through the directors’ SSAS pension, which has enough funds with some borrowing. Before agreeing, they get an independent valuation, which comes in at £325,000, and a survey, which finds the roof needs £20,000 of work.
They negotiate the price down to £320,000. They also check VAT: the seller has opted to tax, but because the pension will let the unit to the business, the purchase can be structured as a transfer of a going concern, so no VAT is charged.
The pension buys the unit, the business pays a market rent into the pension instead of to a landlord, and the directors’ retirement fund now owns a building worth over £300,000. Advice at each step saved them £30,000 on the price, and avoided tying up £64,000 in VAT.
How Rory Mack Associates Can Help
We take the hard work out of buying commercial property. Our team can:
- Find suitable property through our commercial estate agency, including properties not openly advertised
- Tell you what a property is really worth with an RICS valuation
- Negotiate the price and terms on your behalf
- Carry out building surveys and development appraisals
- Manage the property once it’s yours, if you’re letting it out
You can also find opportunities at our property auctions.
Summary
Buying commercial property starts with knowing why you’re buying, what type of property you need and where. Budget for a 25% to 40% deposit, non-residential stamp duty, possible VAT, fees and running costs, not just the price. Business owners may be able to buy through a pension for significant tax benefits. Agree heads of terms, carry out thorough due diligence on title, planning, condition and leases, and expect a typical purchase to take two to four months. With the right team around you, your first commercial property can be the start of something much bigger.
Ready to buy your first commercial property? Talk to our team on 01782 715725.
Frequently Asked Questions
How much deposit do I need to buy commercial property?
Most lenders ask for 25% to 40% of the purchase price. Owner-occupiers buying premises for their own trading business can often borrow slightly more than investors buying a let property. You’ll also need funds for stamp duty, fees and any VAT.
How much is stamp duty on commercial property?
In England, non-residential stamp duty is 0% on the first £150,000, 2% on the portion from £150,001 to £250,000, and 5% above £250,000. For example, a £300,000 commercial property would attract £4,500 in stamp duty.
Do you pay VAT when buying commercial property?
Sometimes. If the seller has opted to tax the building, VAT at 20% is added to the price, although VAT-registered buyers who also opt to tax can usually reclaim it. New commercial buildings normally carry VAT. Buying a let property may be treated as a transfer of a going concern, with no VAT charged, if the conditions are met.
How long does it take to buy commercial property?
A straightforward purchase typically takes two to four months from agreeing terms to completion. Complex deals, lender requirements or title problems can take longer. Auction purchases are faster, usually completing around 28 days after the sale.
Can I buy commercial property through my pension?
Often, yes. Business owners can use a Self-Invested Personal Pension (SIPP) or Small Self-Administered Scheme (SSAS) to buy commercial premises and lease them back to their business at market rent. The rent and any gain are free of income tax and capital gains tax within the pension. Take advice from a regulated financial adviser first.
