This fact sheet summarises the key issues in obtaining commercial and industrial property in the UK.
PROPERTY: COMMERCIAL AND INDUSTRIAL
This information sheet summarises the key issues in obtaining commercial and
industrial property in the UK.
The factors covered are:
1. Procurement options (leasehold or freehold)
2. Property options
3. Timescale for obtaining property
4. Agents fees
5. Legal issues
6. Business rates
7. Obtaining planning permission in the UK
8. Further information
The UK has one of the most open and dynamic commercial property markets in
Europe, with companies benefiting from a wide range of property options,
stable rents and flexible lease arrangements.
1. PROCUREMENT OPTIONS (LEASEHOLD OR FREEHOLD)
For companies setting up in the UK, the key property decision is whether to
rent premises (known as ?leasehold?) or to buy premises (known as
?freehold?). Importantly, there are no restrictions on overseas companies
either buying or renting property in the UK.
Companies can either rent premises that are already available or enter
into what is known as a ?pre-let? (an agreement with a developer to
lease premises before construction is completed, enabling prospective
tenants to specify the design, layout and fittings of the building).
Commercial leases typically run for 15 years with reviews every five
years, although shorter terms are becoming more common. It may be
possible to negotiate ?break clauses? at set times throughout the lease
(enabling the occupier to serve notice to vacate the premises).
The majority of leases on commercial premises are let on ?full repairing
and insuring terms?, which places the responsibility and costs for all
upkeep, decoration and repairs onto the tenant.
In addition, most leases over three years in length will have a provision
to increase the rent in line with the market conditions at pre-determined
points throughout the lease. The standard clause allows for ?upwards-
only? rent reviews at five-yearly intervals (this means that, should the
market rent rise, so does the rent payable).
Businesses selecting the leasehold property option must also pay ?stamp
duty land tax?, which is calculated using the ?net present value? of all
rental payments due over the term of the lease. For more information
(including an online stamp duty calculator), please see:
For information on legal issues for a business tenant, please see:
Buying property in the UK is a straightforward process and, importantly,
there are no restrictions on overseas companies.
In addition to the price of the property, purchasers must also pay stamp
duty land tax based on both the size of the transaction and the location
of the property. For more information, please see:
2. PROPERTY OPTIONS
There are various property options available to businesses throughout the UK
(including leased offices, serviced offices, science parks, industrial properties
and land for development).
a) Leased office options
There is a wide range of leased office options in the UK, from standard
office accommodation to leading-edge headquarters buildings.
Typical rental costs for offices vary across the UK (for further
information, please see Appendix A). The basic rent on a conventional
office lease usually ranges from £130 to £500 per square metre per
annum (approximately £13 to £50 per square foot per annum)
depending on location and facilities. Annual rents are typically subject to
upwards-only rent reviews at the end of each fifth year.
In addition to annual rental charges, service charges are also typically
charged at around £40 to £80 per square metre per annum
(approximately £4 to £8 per square foot per annum). The service charge
is levied by the building owner or their agent, and includes the basic
running costs of the building such as lift maintenance and cleaning of
b) Serviced office options
Serviced offices are available in all major towns and cities across the UK,
and range in size from a single desk through to large offices. Companies
can usually move into a new serviced office within a week.
The key advantages of serviced offices are that leases can be as short as
one month and that all costs are combined into one monthly payment.
Costs are typically based on the number of workstations and can
typically range from £200 to more than £1,000 per workstation per
month depending on the location and the range of services included.
More information on both the cost and availability of serviced offices can
be found at: www.instantoffices.co.uk or www.mwbex.com or
c) Science parks
There are approximately 100 science parks in the UK which provide
commercial property options to support the start-up and development of
knowledge-based businesses. Most science parks have formal links with
universities, institutes and research organisations. For more information
on science parks, please see: www.ukspa.org.uk or the UK Trade &
Investment information sheet entitled ?Science Parks and Business
Incubators in the UK.?
d) Industrial and distribution property options
There is a wide choice of industrial and distribution properties across the
UK, with over 23.9 million square metres of space available (Source:
King Sturge, UK Industrial & Distribution Floor Space Today, March
The average rentals on new industrial and distribution units typically
range from around £50 to £160 per square metre per annum
(approximately £5 to £16 per square foot per annum) depending on
location. Please see Appendix B for details of typical industrial rents
across the UK.
e) Land options ? development sites
For businesses intending to build their own premises, the UK offers a
wide variety of greenfield and brownfield sites in every region (please
see Appendix C for details of typical industrial land values across the
3. TIMESCALE FOR OBTAINING PROPERTY
Although it is possible to occupy a new building within a few weeks, it is
prudent to allow, on average, three to four months from initialising the
property search to taking occupation of an existing property. This includes time
for considering location options, identifying buildings or sites, negotiating
leasehold or freehold terms and drafting appropriate legal documentation.
4. AGENTS FEES
A property agent can assist in both the property search and in negotiating the
main terms of the lease or purchase.
Agents? fees for procuring a leasehold property are approximately 10 per cent
of one year?s rental costs. Agents? fees for purchasing freehold properties are
typically around 1 per cent of the purchase price, although this is subject to
individual negotiation and confirmation of the full range of services required.
For more information on property agents and surveyors in the UK, please see:
5. LEGAL ISSUES
Companies purchasing or leasing property should expect to pay legal fees
(which incorporate conveyancing fees), costs for local authority searches and
bank transfer fees. An experienced property solicitor is typically necessary to
assist in the preparation of all required legal documentation. For contact details
of property solicitors in the UK, including a searchable database, please see:
6. BUSINESS RATES
Business rates are a property tax that business occupiers pay towards the
costs of local government services. Business rates typically range from £20 to
£130 per square metre (approximately £2 to £13 per square foot).
The specific level of business rates payable is based on a professional
assessment of the annual rent of each individual property (as if it were
available to let on the open market). The most recent rating list came into
effect on 1 April 2010 and is based on the valuation date of 1 April 2008 (all
properties are valued from the same date to ensure that they are assessed on
a level basis).
Details of business rates in England/Wales, Northern Ireland and Scotland can
be found at:
? England and Wales: www.voa.gov.uk
? Northern Ireland: www.lpsni.gov.uk/index.htm
? Scotland: www.scotland.gov.uk/Topics/Government/local-
For additional information, please see the UK Trade & Investment information
sheet entitled ?Business and Domestic Charges Payable to Local Authorities?.
7. OBTAINING PLANNING PERMISSION IN THE UK
UK planning regulations are administered by the local authority covering the
area in which the particular building or site is located. Prior to making any
commitments to amend an existing building, construct a new building or
change the usage of a building, businesses must make contact with their local
authority planning department (for a full list of commercial property usage
classes, please see Appendix D).
The UK planning system is different to the planning systems operating in many
other European Union countries. For example:
? The UK planning system is discretionary and therefore more flexible.
The planning system within many European Union countries is often
largely based on rigid development codes or zones (for example, the
Plan Local d?Urbanisme in France, the Bebauungsplan in Germany or
the Bestemmingsplan in the Netherlands).
? The UK has a clear process that typically provides planning decisions
more swiftly than in many other European Union countries.
? The appeals system within the UK also follows a clear process.
However, in many European Union countries, the appeals process
must be undertaken through the courts.
Further details about the UK planning system and a guide for businesses on
obtaining planning permission can be found at: www.planningportal.gov.uk/ or
8. FURTHER INFORMATION
This information sheet was updated in March 2010.
As information changes from time to time, please contact the organisations
listed or UK Trade & Investment to confirm any item that you intend to rely on.
This information sheet was produced by the Marketing Group of:
UK Trade & Investment
66-74 Victoria Street
Tel: +44 (0)20 7215 4957
APPENDIX A ? UK office rental costs
Typical office rental costs
Location Prime office rental costs*
(£ per m per annum)
London ? Canary Wharf £376.75
Midlands and East of England
*Does not include service charges
Source: DTZ Research, 2009
APPENDIX B ? UK industrial rental costs
Regional prime industrial rental costs
Area Prime Rent (£ per m per annum)
Park Royal £121.10
High Wycombe £91.50
Black Country £53.80
South Manchester £64.60
Trafford Park £67.30
Yorkshire and the Humber
Regional prime industrial rental costs ? (continued)
Source: King Sturge, UK Industrial & Distribution Floorspace Today, March
2010 (assumes a minimum size of 1000m )
APPENDIX C ? UK industrial land values
Industrial land values (typical)
Location (£ per acre) (£ per hectare)
Bradford £190,206 £470,000
Leeds £218,535 £540,000
Liverpool £97,127 £240,000
Manchester £218,535 £540,000
Newcastle £78,915 £195,000
Sheffield £182,113 £450,000
Warrington £157,831 £390,000
Birmingham £323,756 £800,000
Black Country £174,019 £430,000
Northampton £151,760 £375,000
Telford £121,408 £300,000
Basingstoke £655,605 £1,620,000
Bristol £275,192 £680,000
Exeter £323,756 £800,000
Plymouth £153,784 £380,000
Swindon £263,051 £650,000
Cardiff £109,268 £270,000
Swansea £95,103 £235,000
Aberdeen £445,164 £1,100,000
Edinburgh £141,643 £350,000
Glasgow £149,737 £370,000
Source: Valuation Office Agency, 2009
APPENDIX D - Commercial property usage classes
Shops, post offices, travel agents, hairdressers, funeral
directors, dry cleaners.
A2 Financial and professional services
Banks, building societies, betting offices, and other financial and
A3 Food and drink
Pubs, restaurants, cafes and hot food take-aways.
Offices, research and development, light industry appropriate in
a residential area.
B2 General industrial
B8 Storage and distribution
Including open air storage.
Hotels, boarding and guest houses where no significant element
of care is provided.
C2 Residential institutions
Residential care homes, hospitals, nursing homes, boarding
schools, residential colleges and training centres.
D1 Non-residential institutions
Surgeries, nurseries, day centres, schools, art galleries,
museums, libraries, halls and churches.
D2 Assembly and leisure
Cinemas, concert halls, bingo and dance halls, casinos,
swimming baths, skating rinks, gymnasiums or sports arenas
(except for motor sports, or where firearms are used).
Source: DCLG, 2009