Posted by
joegrandee
10 yrs ago
I have been running my small arts company out of a 40yr old industrial building that i've rented, for more than 5 years. Alas my very considerate Landlord has indicated to me that he wants to sell up and has asked if i want to buy. it's something i wouldn;t mind doing but am confused by a number of things, in particular Stamp Duty ie what duties i'd have to pay and also what sort of mortgage percentage banks currently offer on industrial property. the property is probably worth around 9m. any advice greatly received
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Banks are less aggressive on industrial properties.
But if your business makes money, it should help.
Don't overpay. Make sure you are aware of the recent transactions.
Can you say where it is?
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the property is in quarry bay, the area is quite hot thanks to the swires development of the area.
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That is probably quite a good area to buy.
Be sure you investigate comparables carefully
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You need to be careful with your mortgage analysis - can you survive if your interest rate moves to 5%? 10%?
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I think he is trying to "lock in his rent" by buying, and so a key consideration is what can his business afford
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Sure, but rents are at all-time highs and interest rates all-time lows. There is a limit to how high landlords can push rents before no business at all can turn a profit. Rents are already falling in various parts of the city so why try to lock in at the peak? More dangerous than that is what happens when interest rates eventually go back up. Rates can come down step by step but when they go up they do so overnight - can his business tolerate a sudden 10% mortgage rate?
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i run a small creative services biz with a staff of 3, so whilst i've been lucky with work over the past 10 years, my industry is fickle and in truth i rely on a handful of clients. we're good at what we do but i can always be usurped by someone cheaper or potentially better so it's a precarious biz. There's a lot of image associated with what we do, so the space i'm in needs to look fresh and contemporary. renting an expensive space, renovating then having the landlord significantly hike my rent 2 years later is not something i relish, hence the preference to buy, but i can see it's not a buyers market at the moment.
anyway since my OP a couple of days ago, i've met with the owner and his verbal valuation is 20% more than the surveyor valuation i've had. Seems i need to start looking for a new space and soon.
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