Owning vs renting commercial property: which is right for you?

If you’re one of the 5.6 million businesses in the UK, the chances are you’ll have to make important decisions daily. One of which might be whether you’re going to own your commercial property or rent it.

commercial office space

If you’re pondering which option to choose, we’ve rounded up the pros and cons of owning and renting commercial property to help you make an informed decision.

What are the advantages of owning?

If you own your premises, you’ll have an asset for your company. As well as providing security for many business loans, owning your property may also make sense financially. For example, if your premises increase in value, you could make money by owning your property.

If you’ve bought your own property, you won’t have to worry about rent increases or a potential switch in landlord either. This is especially beneficial with living costs rising, as many landlords are increasing rent, which could negatively impact your business.

What are the disadvantages of owning your premises?

Although owning your commercial property has plenty of benefits, there are some downsides. Firstly, you’ll need to put down a larger deposit to secure the property. As such, you’ll be subject to more fees and taxes, such as stamp duty.

Furthermore, unlike renting, you’ll be responsible for repairs and damage. Although, with this being said, commercial landlord insurance can help cover the cost of repairs or compensation payouts.

office space

What are the advantages of renting?

One of the advantages of renting is the flexibility that comes with it. As you can negotiate your lease, you can normally choose one that fits your requirements – whether that’s due to the length or level of commitment. Because of this, renting is usually better for small businesses, startups or businesses that like to move around.

Renting is also far cheaper than buying, as you won’t have to pay large costs upfront. You also won’t need to worry about structural repairs as that is the landlord’s responsibility.

What are the disadvantages of renting?

Whilst renting is more flexible, it’s also less stable. As you won’t own the property, your commercial building could be sold on, or the rent could increase. If you suddenly have to move premises because of matters that are out of your hands, this could negatively impact your business.

What’s more, if you’d like a heavily customised and branded office, this isn’t always possible in a rented office space.

To top things off, if you’ve got additional office space that you’re not using, you can’t lease this out for a bit of extra cash unless you own it.

Final thoughts…

Deciding whether to rent or own commercial property is difficult. However, what’s right for you ultimately depends on your business. If you value flexibility, renting might be the best option. If you prefer stability, buying might be the way to go.