4 Differences Between Residential and Commercial Property Conveyancing
The primary stages of residential and commercial conveyancing overall will stay the same.
However, the process may differ quite considerably between the two, and there are certainly some differences that you should be made aware of prior to purchasing.
Howells Solicitors discuss the main differences between commercial conveyancing and the residential process that a buyer should be made aware of before going forward:
1. The Type of Property and Purchase
Of course, one of the most obvious points to make would be the type of property that is being purchased, and why you’re purchasing it. Residential conveyancing involves a home that you’ll be living in or, as a buy-to-let property. However, commercial property is usually bought as a business premises.
2. Is it Freehold or Leasehold?
Most of the UK residential property market is now owned freehold and stats from the end of 2015 show us that the number of leasehold properties that have been sold in England and Wales have risen from 22% to 43% in the past ten years (Land Registry).
The UK Government released the Housing White Paper at the beginning of 2018 which outlined their plans on banning the building of leasehold properties. This would be done in order to ‘cut out unfair and abusive practices within the leasehold system’.
Read more on the new leasehold changes and what they mean for property developers by clicking here.
However, commercial properties are the opposite. These are usually occupied by commercial tenants under a lease – a popular option amongst business owners as it gives them the flexibility to fit the growing demands of their business. For example, if they need to expand the business, then they would be able to lease the property next door too.
Your solicitor will require as much information as possible such as the annual rents recommended, as well as the agreed price between both parties. The lease will differ depending on what type of commercial property it is.
3. Goodwill Payments
Once the residential conveyancing process has been complete, there are usually no extra fees to pay.
However, if the completion of both a commercial property and the transfer of the business that is run out of it has been made, then ‘goodwill payments’ are not uncommon.
This payment usually goes ahead to ensure that the new business owner can keep the same client base and continue trading under the same brand.
4. The Cost of Searches
It is usually more affordable to run searches on a residential property than it is on a commercial property, even though they would cover the same elements, because commercial properties are often larger or on larger plots.