In short, they are very important. Heads of Terms are usually drawn up by the surveyors/agents on a wide variety of leasehold and freehold commercial transactions. For both parties, it is essential that these clearly and concisely deal with the most significant aspects of the deal and reflect what the parties have agreed. Failure to do so can jeopardise the successful outcome of the transaction and can add time and expense to what might otherwise be a straightforward deal.
We can advise from the outset on any draft Heads of Terms to ensure the best possible outcome in a timely and cost effective fashion.
SDLT (or Stamp Duty Land Tax) is not only a tax on residential property but, depending on certain criteria, it is also payable both on purchase and leases (among other transactions) of commercial property.
The SDLT thresholds for the purchase of commercial property are as follows:-
| 0 - £150,000 | 0% |
| £150,001 - £250,000 | 1% |
| £250,001 - £500,000 | 3% |
| £500,001 and above | 4% |
The duty must be paid within 30 days of completion or penalties will be due. Depending on how the deal is structured, SDLT can be a hefty burden on the profit margins, therefore it is best to take advice as soon as possible so you know your potential liability at the outset and can budget accordingly.
As of 1 April 2008, the rules on the payment of business rates on empty commercial properties were controversially changed by the Government. As a result, the empty property rate has increased from 50% to 100% of the basic occupied business rate once the initial void periods (3 months for all non-industrial property & 6 months for industrial) have elapsed.
The changes were designed by the Government to encourage owners to relet, redevelop or sell empty commercial buildings. However, there is concern in the market that the opposite effect may be true and that the market may instead be stifled. Speculative development may be reduced as fewer developers risk having to pay out extra monies while any empty vacant property they own stands idle.
At this early stage, the jury is still out, but it is already causing investment funds, landlords, developers and tenants alike some headaches.
The searches needed really depend on the nature of the transaction; the type of property being acquired and its proposed use after completion. The basic searches we would always recommend comprise the Local Authority search; Environmental search and Drainage & Water search.
However, other searches required may include searches of the Commons Register; Coal Mining; Chancel Repair and Utility/Services & Wayleave searches among others. We will be able to advise on exactly what searches you may need and the likely cost.
Exchange and completion are two very different but equally important stages of any transaction. Until contracts are exchanged, neither party has any legal commitment to the other side to proceed, however all that changes on exchange and there are strict legal penalties that can be imposed and remedies available to the non-defaulting party in the event of any default or breach of the contractual obligations. The deposit (if any) is payable at this stage and if it can be, the date for completion is fixed.
Completion is the point at which the balance of any monies due to the seller is payable and in return unrestricted occupation and/or ownership of the property is usually given to the buyer.