Selling a commercial property? - Key considerations to prepare for the transaction

14 July

Before instructing solicitors on the sale of commercial property or even marketing the property, there are important steps that you can take to prepare for the transaction. Early preparation and organisation will facilitate a swift transaction and reduce the stress if parties are under pressure to complete within a tight timescale.

·         Asbestos Survey and Fire Risk Assessment: For commercial property, there are obligations to comply with asbestos and fire safety regulations.  Depending on the age of the building, this could mean ensuring that there is an asbestos management survey in place and complying with its recommendations. For all buildings, a fire risk assessment should be carried out. It is important for you to ensure that everything is up to date and to present a survey/risk assessment to the buyer;

 

·         Energy Performance Certificate: The agent marketing the premises can assist you with this but you should arrange for an Energy Performance Certificate to be prepared to rate the efficiency of the building. Minimum energy efficiency standards will apply in due course meaning that you could be required to take active steps to ensure that the efficiency reaches a required level (not yet in force).  In the future, early knowledge of this will provide you with time to carry out improvements before a transaction has begun;

 

·         Taxation: It is advisable for you to speak to your accountant at an early stage in relation to:

 

o   VAT: You will be obliged to charge VAT on the sale price if an option to tax (also known as a VAT election) has been made in respect of the premises.  If you do not have a copy of the VAT election, then you may be able to obtain a duplicate from the Option to Tax Department. When the buyer knows the VAT position, it will be able to take the necessary steps with its own accountant and enquire whether the tax can be reclaimed post completion;

 

o   Capital Allowances: These can be used to offset against profit. You should speak to your accountant to establish whether there are capital allowances available in respect of the building for you or for the buyer. New rules mean that if certain steps are not taken when the transaction is taking place, then the buyer would lose any available allowances.

 

 

Should you require any assistance in relation to the issues raised by this article or to any other commercial property matter, please contact a member of our Commercial Property team who will be happy to assist.

 

 

Gareth Wedge – Senior Associate

Commercial Property Team

DDI: 029 2082 9108

gwedge@darwingray.com

 

July 2015

 

This briefing just provides an overview of the law in this area, it is not legal advice and should not be treated or relied upon as such. You should talk to us for a complete understanding of how it may affect your particular circumstances.

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