Office In a Building That’s Now For Sale...
Discussion
I have an office in a building that’s just been put up for sale. Well the lease has...
It’s owned by Network Rail and on a long lease; it’s the lease that’s for sale; 100 years remaining.
My suite is one of seven and the current leaseholders have not really made the most of the place: charging low rents and the like; the other side of the coin is that the building is in a clean but shabby state. However issues with the outside such as the roof needs looking at.
They state they make 30,000 a year and the lease is for sale at an asking price of 400,000.
What’s the lay of the land here? I don’t really want he hassle of running the place but I’d be crazy not to look into it and consider the option of buying.
On a commercial lease; is it just like residential where; once it dips below 80’ish years; it affects value badly?
The return of 30k a year and asking price of 400,000... seems an ok return but not brilliant...
What questions should I be asking...
It’s owned by Network Rail and on a long lease; it’s the lease that’s for sale; 100 years remaining.
My suite is one of seven and the current leaseholders have not really made the most of the place: charging low rents and the like; the other side of the coin is that the building is in a clean but shabby state. However issues with the outside such as the roof needs looking at.
They state they make 30,000 a year and the lease is for sale at an asking price of 400,000.
What’s the lay of the land here? I don’t really want he hassle of running the place but I’d be crazy not to look into it and consider the option of buying.
On a commercial lease; is it just like residential where; once it dips below 80’ish years; it affects value badly?
The return of 30k a year and asking price of 400,000... seems an ok return but not brilliant...
What questions should I be asking...
Best thing you can do is get the advice of a local chartered surveyor.
There's a great deal to consider around value, the long leasehold covenants, the sub lease covenants and the condition of the building/dilapidations liability.
I'm sure you're already aware there's much more to it than £400k down gets you £30k pa back.
Good luck
There's a great deal to consider around value, the long leasehold covenants, the sub lease covenants and the condition of the building/dilapidations liability.
I'm sure you're already aware there's much more to it than £400k down gets you £30k pa back.
Good luck
Noel said:
Best thing you can do is get the advice of a local chartered surveyor.
There's a great deal to consider around value, the long leasehold covenants, the sub lease covenants and the condition of the building/dilapidations liability.
I'm sure you're already aware there's much more to it than £400k down gets you £30k pa back.
Good luck
Thanks There's a great deal to consider around value, the long leasehold covenants, the sub lease covenants and the condition of the building/dilapidations liability.
I'm sure you're already aware there's much more to it than £400k down gets you £30k pa back.
Good luck
you're right; I need to find out every last detail before moving forward.Speaking as a chartered surveyor I wholeheartedly agree with Noel’s advice!
Whilst the shortening lease does have an effect on value relative to a long lease or a freehold, it’s nowhere near as much a problem for a commercial as it would be for a residential property.
Bear in mind that if someone else buys the building then you could face a rent increase at the next review if it is found that the rents have been below market value like you think they might be.
Likewise, if you are on a full repairing lease then if the fabric of the building does need work doing then you will have to contribute if the new owner decides to update it.
Whilst the shortening lease does have an effect on value relative to a long lease or a freehold, it’s nowhere near as much a problem for a commercial as it would be for a residential property.
Bear in mind that if someone else buys the building then you could face a rent increase at the next review if it is found that the rents have been below market value like you think they might be.
Likewise, if you are on a full repairing lease then if the fabric of the building does need work doing then you will have to contribute if the new owner decides to update it.
soxboy said:
Speaking as a chartered surveyor I wholeheartedly agree with Noel’s advice!
Whilst the shortening lease does have an effect on value relative to a long lease or a freehold, it’s nowhere near as much a problem for a commercial as it would be for a residential property.
Bear in mind that if someone else buys the building then you could face a rent increase at the next review if it is found that the rents have been below market value like you think they might be.
Likewise, if you are on a full repairing lease then if the fabric of the building does need work doing then you will have to contribute if the new owner decides to update it.
Thank you! All points noted - especially the fabric update part!Whilst the shortening lease does have an effect on value relative to a long lease or a freehold, it’s nowhere near as much a problem for a commercial as it would be for a residential property.
Bear in mind that if someone else buys the building then you could face a rent increase at the next review if it is found that the rents have been below market value like you think they might be.
Likewise, if you are on a full repairing lease then if the fabric of the building does need work doing then you will have to contribute if the new owner decides to update it.
vdn said:
I have an office in a building that’s just been put up for sale. Well the lease has...
It’s owned by Network Rail and on a long lease; it’s the lease that’s for sale; 100 years remaining.
My suite is one of seven and the current leaseholders have not really made the most of the place: charging low rents and the like; the other side of the coin is that the building is in a clean but shabby state. However issues with the outside such as the roof needs looking at.
They state they make 30,000 a year and the lease is for sale at an asking price of 400,000.
What’s the lay of the land here? I don’t really want he hassle of running the place but I’d be crazy not to look into it and consider the option of buying.
On a commercial lease; is it just like residential where; once it dips below 80’ish years; it affects value badly?
The return of 30k a year and asking price of 400,000... seems an ok return but not brilliant...
What questions should I be asking...
Another point re the state of the building: what does the 100 year lease say about dilapidations? If you do buy it, I'd take advice as to whether to ring-fence it in a separate Ltd company to protect against claims down the line. Some operators would have a lease holding company then a sub-letting company beneath that...It’s owned by Network Rail and on a long lease; it’s the lease that’s for sale; 100 years remaining.
My suite is one of seven and the current leaseholders have not really made the most of the place: charging low rents and the like; the other side of the coin is that the building is in a clean but shabby state. However issues with the outside such as the roof needs looking at.
They state they make 30,000 a year and the lease is for sale at an asking price of 400,000.
What’s the lay of the land here? I don’t really want he hassle of running the place but I’d be crazy not to look into it and consider the option of buying.
On a commercial lease; is it just like residential where; once it dips below 80’ish years; it affects value badly?
The return of 30k a year and asking price of 400,000... seems an ok return but not brilliant...
What questions should I be asking...
skwdenyer said:
vdn said:
I have an office in a building that’s just been put up for sale. Well the lease has...
It’s owned by Network Rail and on a long lease; it’s the lease that’s for sale; 100 years remaining.
My suite is one of seven and the current leaseholders have not really made the most of the place: charging low rents and the like; the other side of the coin is that the building is in a clean but shabby state. However issues with the outside such as the roof needs looking at.
They state they make 30,000 a year and the lease is for sale at an asking price of 400,000.
What’s the lay of the land here? I don’t really want he hassle of running the place but I’d be crazy not to look into it and consider the option of buying.
On a commercial lease; is it just like residential where; once it dips below 80’ish years; it affects value badly?
The return of 30k a year and asking price of 400,000... seems an ok return but not brilliant...
What questions should I be asking...
Another point re the state of the building: what does the 100 year lease say about dilapidations? If you do buy it, I'd take advice as to whether to ring-fence it in a separate Ltd company to protect against claims down the line. Some operators would have a lease holding company then a sub-letting company beneath that...It’s owned by Network Rail and on a long lease; it’s the lease that’s for sale; 100 years remaining.
My suite is one of seven and the current leaseholders have not really made the most of the place: charging low rents and the like; the other side of the coin is that the building is in a clean but shabby state. However issues with the outside such as the roof needs looking at.
They state they make 30,000 a year and the lease is for sale at an asking price of 400,000.
What’s the lay of the land here? I don’t really want he hassle of running the place but I’d be crazy not to look into it and consider the option of buying.
On a commercial lease; is it just like residential where; once it dips below 80’ish years; it affects value badly?
The return of 30k a year and asking price of 400,000... seems an ok return but not brilliant...
What questions should I be asking...
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