If our FAQ below doesn't answer your question, please get in touch with us via our contact page.
- What is the difference between freehold and leasehold?
- My bank has turned me down for a loan. What can I do?
- Is your service free to buyers?
- I've not bought a business before. How long does it take?
- What does SAV mean?
- What is gross profit and net profit?
- I am buying a business and it has 5 staff - how will I know they won't all leave as soon as I take over?
- None of the staff have written contracts - does this mean they don't have any rights as employees?
- Transfer of undertakings (TUPE) - Key points
- What is a break clause?
- What is 1954 act protection?
- What is a lease assignment?
- What is forfeiture?
- What is ground rent?
- What is insurance rent?
- What is a sublease/underlease?
- What is a rent review?
- A Guide to commercial use classes
- Change of use
- What is an energy performance certificate ('EPC')?
- What is stamp duty land tax?
SDLT rates for non-residential or mixed use properties
Non-residential property includes:
- commercial property such as shops or offices
- agricultural land
- any other land or property which is not used as a dwelling
- six or more residential properties bought in a single transaction
A mixed use property is one that incorporates both residential and non-residential elements.
The table below applies for freehold and leasehold non-residential and mixed use purchases and transfers
If the transaction involves the purchase of a new lease with a substantial annual rent, there may be additional SDLT charge to that shown below, based on the rent. See the later section and table for more detail.
Non-residential land or property rates and thresholds
|Purchase price/lease premium or transfer value (non-residential or mixed use)||
Up to £150,000 - annual rent is under £1,000
Up to £150,000 - annual rent is £1,000 or more
Over £150,000 to £250,000
Over £250,000 to £500,000
Note that for the above purpose the annual rent is the highest annual rent known to be payable in any year of the lease, not the net present value used to determine any tax payable on the rent as described below.
SDLT on rent - new non-residential or mixed use leasehold purchase
When a new non-residential or mixed use lease has a substantial annual rent, SDLT is payable on both of the following which are calculated separately and then added together:
- the lease premium or purchase price - see the table above
- the net present value of the rent payable (this is based on the value of the total rent over the life of the lease)
SDLT on rent for new leasehold properties (non-residential or mixed use)
|Net present value of rent - non-residential||
£0 - £150,000
1% of the value that exceeds £150,000
Energy Performance Certificates (EPCs) are needed whenever a property is:
You must order an EPC for potential buyers and tenants before you market your property to sell or rent.
An EPC contains:
- information about a property’s energy use and typical energy costs
- recommendations about how to reduce energy use and save money
An EPC gives a property an energy efficiency rating from A (most efficient) to G (least efficient) and it is valid for 10 years.
In effect, if you purchase the Freehold Fixtures & Fittings and Goodwill you will own the property as well as the business. If you purchase Leasehold you will own the business and fixtures and fittings and the right, usually for a given period, to occupy the business premises for an agreed rent.
We are able to assist buyers with finance; we have close links with experience brokers that can often put together a financial package when other lenders (high street banks, building societies etc) fail. If you are looking to buy a business, in most circumstances we will be able to help.
Yes, our service is free. We are happy to offer Buyers professional advice on many aspects of buying a business; from helping to identify the business that is right for you, explaining the various methods of financing your investment, choosing a solicitor or simply explaining the transaction process through to completion in an easy-to-understand and "jargon-free" manner.
The transaction starts with arranging an appointment with us to view your chosen business. Once you have met the Owners, we will provide you with the latest profit and loss account information on which you can base your offer. Once your offer has been accepted, you should allow 6 to 8 weeks for both sides' solicitors to agree the draft Sale and Purchase contract details. Once both sides are in agreement an Exchange of Contracts can take place. During this period, buyers generally sort out their funding requirements. If it is a leasehold business, this period is also used to gather references for the Landlord. Once the Landlord is satisfied, a licence to assign the existing lease is granted and the transaction can then move to an Exchange of Contracts and Completion.
A break clause is a right to bring the lease to an end prior to the end of the term. Break clauses can either be exercised solely by the Landlord or the Tenant or by both, depending on the wording of the lease.
Under the terms of the Landlord & Tenant Act 1954, tenants of business premises have the right to automatically renew their lease at the end of the term unless: The landlord can show that he intends to redevelop; or The landlord offers suitable alternative accommodation The lease takes away the renewal rights.
The transfer of the tenant’s interest in the lease to another entity (referred to as the assignee).
The ability of the Landlord to bring the lease to an end during the term as a result of the tenant not having paid rent, not having complied with lease covenants or becoming insolvent.
Ground rent is a regular payment made by the owner of a leasehold property (i.e. tenant or lessee) to the landlord. A ground rent is normally created when a landlord sells off a piece of land or a building to a tenant on a long lease. The creation of a ground rent on land provides an income to the landlord.
The amount the tenant must pay to the landlord to cover the costs of insuring the premises.
A sublease is a lease which has been granted by one who himself is a leaseholder. A key characteristic of a sublease is that it must be for a period of at least one day shorter than the lease out of which it has been granted.
Rent review refers to the process by which the rent payable under the lease is reassessed during the term. Rent reviews often take place every 3 or 5 years. The lease will set out how the rent is to be reviewed. This is sometimes ‘Open Market Rent’ whereby the rent is increased to the amount at which the landlord could let the property on that date on the open market. An alternative is the ‘Index Linked’ rent review whereby the rent is increased in accordance with the rate of inflation.
SAV means Stock at Valuation. Most businesses sell a product and to enable their customers to have a choice they hold a certain amount of stock. When you buy a business this stock is not usually included in the asking price for the business. For example, a ladies or gents clothing outlet will have a certain amount of stock which includes what is on display and what is in the store room. When you buy the business you may need the stock to carry on trading while you introduce your own lines. So the value (cost price) of the stock is calculated and paid for when you take over the business.
Gross Profit is the profit after the stock has been paid for - takings less purchases. Net Profit is the profit after all other expenditure has been deducted and is the money the business has made for the financial year.
As a matter of law the contracts transfer on completion, but the employees are free to give notice to leave under their contracts of employment. The best advice is to check with the seller if anyone gives notice before completion.
All employees have statutory rights and terms are implied into their contracts by statute and common law. They also have a right to written terms of employment so get them done as soon as possible.
TUPE applies when an undertaking or part of it is transferred from one employer to another where:
all or part of a sole trader's business or partnership is sold or otherwise transferred a company, or part of it, is bought or acquired by another (if the second company buys or acquires the assets and then runs the business rather than acquiring the shares only) two companies cease to exist and combine to form a third a contract to provide goods or services is transferred in circumstances which amount to the transfer of a business or undertaking to a new employer.
TUPE can apply regardless of the size of the transferred undertaking, ie from large organisations employing thousands of employees to small businesses like a village shop with one assistant.
The Transfer of Undertakings (Protection of Employment) Regulations (TUPE) protects employees' terms and conditions of employment when a business is transferred from one owner to another. Employees of the previous owner when the business changes hands automatically become employees of the new employer on the same terms and conditions. It's as if their employment contracts had originally been made with the new employer. Their continuity of service and any other rights are all preserved.
Where there is to be a transfer of an undertaking the employer has an obligation to inform and consult with its workforce this could be either a Trade Union or workforce representatives. And let them know the transfer is happening and why, and how it will affect them.
TUPE does not apply to:
transfers by share take-over because, when a company's shares are sold to new shareholders, there is no transfer of the business: the same company continues to be the employer transfer of assets only (eg the sale of equipment alone wouldn't be covered but the sale of a going concern including equipment would be covered) transfer of a contract to provide goods or services where this doesn't involve the transfer of a business or part of a business transfers of undertakings situated outside the UK.