At Howells Solicitors, we have specialists in both residential and commercial property conveyancing, but does the process differ considerably depending on the type of property you’re buying? Our team answer just that here.
Is Commercial Conveyancing Widely Different to the Residential Process?
In short: no. The primary stages of conveyancing for both types of property are broadly the same. However, there are a few key deviations you should be aware of. Read on to discover the main conveyancing differences.
The Differences Outlined
The Type of Property and its Purpose
The most obvious difference is between the type of property being bought or sold and its purpose. Residential conveyancing involves a home or buy to let residential property, whereas commercial typically involves a business premises.
Freehold vs Leasehold
The majority of UK residential property is now owned freehold. However, according to Land Registry, at the end of 2015, the number of leasehold properties being sold in England and Wales had doubled over the past 10 years from 22% to 43% of transactions.
However, the UK Government released the Housing White Paper on February 7th 2018 which outlined plans to ban the building of leasehold properties in order to ‘cut out unfair and abusive practices within the leasehold system’ – something that, with time, will see freehold properties’ dominance grow.
Commercial properties are the opposite. These are commonly occupied by commercial tenants under a lease. This is popular among business owners as it provides a business with flexibility to fit the growing demands of their business. For example, leasing next door as well if their requirements grow.
As a result, on instruction, your solicitor will likely require further information as to annual rents and the agreed price. And, it is important to note, this lease will differ according to the type of commercial property in question.
Goodwill Payments
Once conveyancing has been completed on a residential property, it is unusual for any additional fees to be charged. However, if a commercial property is being bought as well as the business that is run out of it, it is not uncommon for an additional ‘goodwill’ payment to be made paid.
This ‘goodwill’ payment is made to ensure the right to adopt the previous business owner’s customers or client base and continue trading under the same name. This will also involve additional clauses in the contract to deal with employees, stock, etc.
Cost of Searches
Generally, the cost of running searches on a commercial property are more than on a residential building. These typically cover the same elements, however, there is a larger fee due to the size of the property and/or land that is covered in the search.
Thinking of Buying a Commercial Property?
If you’re thinking of purchasing a commercial property and are looking for more guidance on the process and how it differs to the traditional residential system, please contact our friendly and knowledgeable commercial conveyancing solicitors who will be able to answer all your questions.
Call 0808 178 2773 or click below to learn more.
