We are often asked what the key steps are in purchasing a commercial property in England; here is the typical journey of a buyer or tenant:
1. Identify a suitable real estate investment (it is recommended to use an agent (likely to be a surveyor) to help you find one);
2. Obtain financing, if you need funds to finance the purchase, or works to the property, for example;
3. Make an offer (usually through a surveyor who represents the owner);
4. Negotiate the commercial terms of the lease or purchase (it is highly recommended to engage a surveyor at this stage of the transaction, especially if you are negotiating a lease – a surveyor can help you negotiate better terms and make sure you are paying the right price/rent). It is likely at this stage that you will be asked to show proof of funds. Once the main terms of the lease or purchase are approved, Heads of Terms will be prepared by the agents and issued to the parties. Heads of Terms are not the equivalent of a promise to sell or purchase, which are commonly used in France – they are not legally binding;
5. Appoint a solicitor;
6. Conduct thorough inspections to check the condition of the property (a surveyor can help with this and carry out a building survey of the property). The solicitor’s due diligence exercise begins at this stage too;
7. Solicitors prepare and negotiate legal documents, for example with:
- a sale/purchase of a freehold or leasehold interest: a contract and a transfer deed (and also, in the case of a commercial lease purchase, a licence to assign);
- a new lease: if applicable, an agreement for lease, lease, rent deposit deed;
8. A legal report is issued by the solicitor on the property and legal documents;
9. If the legal report is approved and the buyer or tenant wish to proceed, the legal documents are issued for signing. Unlike in France, the signing of the documents themselves is not legally binding – it is simply an administrative step in the preparation for the eventual exchange of contracts and completion;
10. Signed contracts (or agreement for lease in the case of a lease) are exchanged, and the completion date confirmed – the parties are now legally bound to the transaction. A deposit is usually paid to the seller/lessor on exchange;
11. The transaction is completed, either by, in the case of a:
- purchase: payment of the purchase price (and other sums due under the contract) and completion of the transfer deed (i.e. dating of the deed); or
- new lease: completion of the lease and payment of rent and other sums due;
12. Payment of any Stamp Duty Land Tax due on the transaction. This fee is normally paid, on your behalf, by your solicitor; and
13. Registration of the transfer deed or lease at the Land Registry.
Legal Support
If you need help with the acquisition of a commercial real estate asset, or advice on a commercial lease, in England or Wales, please do not hesitate to contact us: we have a highly experienced team that regularly works with investors, investment funds, restaurants, tradesmen, luxury brands or companies, for example.
Download the brochure in French that outlines the essential steps involved in an English real estate transactions here.
