Most people understand the process of residential conveyancing, either because they’ve bought their own home or have learnt about someone else’s experience.
But what about commercial conveyancing?
Is the process of buying a business property the same?
The short answer is yes – they both involve the transfer of property ownership and the main stages of both are very similar. However, commercial conveyancing is usually more complicated, and there are a few fundamental differences between the two.
Differences that can have an impact on how long the process takes and how much it costs. Let’s take a closer look.
Residential vs. commercial property conveyancing
4 key differences between 2 similar processes.
- Leasehold transfer
Most residential properties in the UK are now freehold.
In fact, according to the latest data from the Land Registry and the Department for Levelling Up, Housing and Communities, only 8% of houses in England are now leasehold. And, in England and Wales, just 24% of all residential property transactions in 2022 were leasehold.
For commercial properties, though, the opposite is true.
The majority of business properties are leasehold – which means, as a buyer, you’ll be expected to take over the lease from the previous owner and pay an annual fee to the landlord. In most cases, transferring this lease and negotiating its terms can make the commercial conveyancing process a little more complex and time-consuming for your solicitor.
- Due diligence
Due diligence is an essential aspect of both residential and commercial property conveyancing – but the extent of the investigation varies quite significantly.
Whilst residential due diligence is relatively streamlined and typically includes standard property searches and surveys, commercial due diligence is much more rigorous.
After all, not only is the building likely to be larger, the stakes involved in a business property transaction are much higher. Your legal representative will often need to conduct extensive investigations into its financial, environmental and operational history. And as a result, commercial property searches often cost more than those for residential buildings.
- Legal regulations
They may both involve the transfer of property ownership. However, residential and commercial conveyancing processes are governed by separate legal frameworks.
Generally speaking, residential regulations are primarily aimed at protecting consumers and ensuring fairness for the buyer. Whereas, for commercial conveyancing, the legal rules focus more on business interests, planning permissions and compliance with lease agreements.
A specialist commercial property solicitor should have a good understanding of this distinction, ensuring that all legal requirements are met, and your rights are protected. But once again, it can make the conveyancing process a little more complicated and longer to complete.
- Finances and fees
Financing options for a business property are much more diverse.
Compared to residential properties, which are typically financed by one buyer and their mortgage lender, commercial properties often involve multiple buyers, investors or business entities. And may include commercial loans, partnerships, joint ventures etc.
Adding to this intricacy, a ‘goodwill payment’ will also often need to be made.
Once conveyancing has been completed on a residential property, it’s unusual for any extra fees to be charged. But as commercial property is typically bought hand-in-hand with the business that trades out of it, it’s not uncommon for an additional fee to be paid to the seller. This ensures the right to adopt their previous customers and continue trading under the same name.
The commercial conveyancing process
There’s no denying, due to the differences outlined above, commercial conveyancing isn’t quite as straightforward as residential conveyancing – and the process can be a little more convoluted. But with the right commercial conveyancing solicitors on your side, most transactions can still be completed smoothly and efficiently.
Here at St Helens Law, we always follow the same simple three-step process:
- Investigate
We start by conducting a full, thorough investigation of the property in question. Any pre-contract searches are arranged and completed, and standard enquiries will be raised with the seller’s solicitor via CPSEs (Commercial Property Standard Enquiry Forms).
- Exchange contracts
Once satisfied with the outcome of this investigation, both parties can then negotiate and exchange draft contracts. For the transaction to be official and the contracts to become legally binding, you will then be expected to pay the agreed deposit to the seller.
- Completion
Any pre-completion searches will be undertaken. To finalise the property transaction, a transfer deed will be signed and dated. Simultaneously, you’ll need to send the balance of the purchase price to the seller. Then, following completion, we will pay any stamp duty land tax owed to HMRC and apply to the Land Register to register your purchase.
Need help buying or selling a commercial property?
Here at St Helens Law, we have a highly experienced team of commercial conveyancing solicitors – who demonstrate advanced knowledge in this area and have a deep understanding of the nuances of commercial property law.
Whether you’re looking to purchase a corner shop or would like to sell a multi-million-pound factory, no matter how complex the transaction, we can guide you step-by-step through the commercial conveyancing process – ensuring all legal requirements are met and reaching completion with minimal stress, minimal delays and minimal expense.
Over the years, we’ve worked with a wide range of businesses, from small high street stores and restaurants to housing associations and commercial developers – and we appreciate the importance of speed and clear communication. Which is why we always work efficiently and accurately, allowing you to see a return on investment as soon as possible.
We also strive to offer fair and competitive rates. The length of time it takes to complete commercial property conveyancing (and the associated cost) varies depending on the complexity and value of the sale. However, we can often act on a fixed fee basis to ensure work is completed as cost-effectively as possible.
An initial consultation is also available with our business property solicitors free of charge. So where’s the harm in getting in touch? If you’re ready to buy or sell a commercial property, or would like to find out more about the legal process, simply give us a call on 01744 742360 to speak to a member of the team. Alternatively, you can fill out our online contact form.