FAQ's

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.

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.

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).

PDF: The legal process for Lease Assignment

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.

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.

PDF: Understanding a commercial property lease

The Town and Country Planning (Use Classes) Order 1987 (as amended) puts uses of land and buildings into various categories known as 'Use Classes'.

The following list gives an indication of the types of use which may fall within each use class. Please note that this is a guide only and it's for local planning authorities to determine, in the first instance, depending on the individual circumstances of each case, which use class a particular use falls into.

PDF: Guide to use classes 2010

Before you negotiate a lease or buy a property for your business, check whether you need to obtain planning permission for your intended use, and, if so, your chances of getting it.

In many cases involving similar types of use, a change of use of a building or land does not need planning permission. Planning permission is not needed when both the present and proposed uses fall within the same ‘class’, or if the Town and Country Planning (Use Classes) Order says that a change of class is permitted to another specified class (see table below and associated text under ‘Additional change of use permitted development rights applying from 30 May 2013’).

For example, a greengrocer’s shop could be changed to a shoe shop without permission as these uses fall within the same ‘class’, and a restaurant could be changed to a shop or a estate agency as the Use Class Order allows this type of change to occur without requiring planning permission.

Most external building work associated with a change of use is likely to require planning permission.

Additionally, a planning application is not required for change of use in the following circumstances:

• from A1 or A2 to A1 plus up to two flats above;
• from A2 to A2 plus up to two flats above.

These changes are reversible without an application only if the part that is now a flat was, respectively, in either A1 or A2 use immediately before it became a flat.

The above information is only provided as a guide and we advise that you obtain your own specialist advice at all times.

Energy Performance Certificates (EPCs) are needed whenever a property is:

• built
• sold
• rented

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.

SDLT rates for non-residential or mixed use properties

Non-residential property includes:

• commercial property such as shops or offices
• agricultural land
• forests
• 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)	SDLT rate
Up to £150,000 - annual rent is under £1,000	Zero
Up to £150,000 - annual rent is £1,000 or more	1%
Over £150,000 to £250,000	1%
Over £250,000 to £500,000	3%
Over £500,000	4%

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	SDLT rate
£0 - £150,000	Zero
Over £150,000	1% of the value that exceeds £150,000