There are many important decisions you will need to make as a business owner, and one of these is whether to buy or rent your business premises. Of course, there is no correct or incorrect answer – it all depends on your business and your financial situation. Nevertheless, below, we take a look at the advantages and disadvantages of both options in further detail so that you are better equipped to make the right decision for you.
Advantages of renting / disadvantages of buying
Let’s begin by taking a look at the reasons to consider renting your commercial property instead of buying it. One of the main reasons why business owners prefer this option is because they do not have the responsibility for security, decoration, fittings, fixtures, and maintenance. No matter whether you need temporary boiler hire or new security locks fitted, this will be the landlord’s responsibility. Not only does this enhance convenience for you, but it means that you will be able to budget better, as you won’t have unexpected repair and maintenance bills.
In fact, the financial benefits associated with renting are very compelling. You wouldn’t need to come up with a large deposit, as would be the case if you were to buy a commercial property. This is especially beneficial for start-ups, enabling them to free up money that could be used for other, more pressing business purposes.
Renting your premises also comes with much more flexibility. You will be able to react to any changes in the market. If an opportunity arises, you can relocate your business to another area and take advantage of it. Extricating yourself from a rental agreement is much, much easier than selling a property or finding a new tenant to lease it to.
Advantages of buying / disadvantages of buying
While buying a commercial property may require a greater monetary outlay in the beginning, a lot of people prefer it because they are going to own an asset that could increase in value. When renting out any type of property, be it commercial or domestic, there is always the feeling that you are simply throwing money down the drain, as you are making monthly payments but don’t have any assets to show for it. Moreover, while the deposit may be higher, the monthly payments on your mortgage are likely to be lower than rental payments will. Therefore, it is all about determining whether a lower initial outlay or lower recurring payments are more important to you. It is also worth pointing out that interest payments on a commercial mortgage are tax-deductible.
Aside from this, another benefit associated with buying a commercial property is the fact that you can sublet part of the building if you are not going to use all of the space. This is a great way to recoup some of your outgoings. A lot of business owners also prefer the level of control that comes with owning their premises. They will be able to determine what service and repair providers they use and how they decorate the office, ensuring it is in keeping with their brand. Not only this, but owning a commercial property can be more secure, as you will not be exposed to large rent increases.