As you might expect, a commercial property survey needs to do a lot more heavy lifting than a home buyer’s report. It’s not just about the property’s age and condition, but also about the underlying technicalities and how the building will be used.
A business purchasing a local warehouse is likely to have different priorities and concerns from someone considering a 10-year office lease. Someone investing in a property may want a valuation rather than a condition report. A landlord may want to know what work needs to be done on the building and how much it will cost.
The right survey depends largely on two things: what you are doing with the property andwhere the financial risk lies.
Buying a Commercial Property
If you are purchasing an office, retail space or something more complicated like an industrial site, a pre-acquisition survey is the natural starting point.
This ensures you are doing your homework before committing to an expensive project. The surveyor inspects the building, identifies issues that could affect the purchase and any future spending, and reports back to you. Common issues a commercial property surveyor might spot include:
- Walls, floor or roof defects
- Signs of water damage or ingress
- Ageing assets or materials
- Previous alterations
- Maintenance liabilities
You cannot judge a commercial building on appearance alone. An office might have been refurbished recently but may still have a roof problem that will cost you later. An industrial complex may seem ideal until you realise that external repairs are going to be costly.
Schedule of Condition
Tenants taking commercial premises should be aware of therepair obligations contained in the lease. Depending on the wording, you could eventually become responsible for maintaining the building in a way you did not previously imagine.
A Schedule of Conditionis a record of the state of the property at any particular time. Photographs and written descriptions create a detailed record of existing defects and any deterioration.
If done properly it can help limit the tenant’s liability for repairs. If something is missed, however, it can result in additional expenses that the tenant must cover and cannot dispute.
Dilapidations Surveys
Dilapidations also concern a tenant’s obligations to repair and maintain commercial premises under the lease.
A survey may be a good idea towards the end of a tenancy to identify breaches and prepare a Schedule of Dilapidations. For tenants, professional advice can help assess a landlord’s claim and distinguish genuine liabilities from work for which they may not be responsible. It can be a complicated business and the sums involved can be substantial.
Wignalls acts in dilapidations matters for both landlords and tenants. Our services include inspections, Schedules of Condition and Dilapidations, liability advice and negotiation.
Do I Need a Valuation?
TheRICS Red Book valuation provides a formal, independent assessment of a commercial property.
Valuation involves more than looking at the floor area and finding a nearby property to compare it to. The valuer will need to consider rental income, lease terms, location, comparable transactions, yields, condition and the wider investment market.
Rent Reviews and Lease Renewals
Commercial surveyors also become involved during the life of a lease, particularly when rent or lease terms are due for reconsideration.
A rent review can determine the rent payable for several years, so accepting a proposed figure without checking whether it is fair or not is critical. Surveyors take a deep dive into the lease provisions, rental evidence and the condition of the property before advising on an appropriate position.
Other things can be important, such as lease length, those repair obligations, what break clauses are in place and other terms that can affect operations and finances.
Property Management and Planned Maintenance
Owners of commercial property sometimes require surveying input once the acquisition or lease has been completed.
Buildings always need maintenance. There may be statutory matters that must be managed. For any business, expenditure is easier to control when problems are anticipated rather than dealt with reactively.
Professional management property advice can include:
- Maintenance planning
- Operational and compliance reviews
- Service charges
- Future capital works
This becomes increasingly useful with larger properties or portfolios, where even relatively ordinary maintenance decisions can represent significant expenditure when multiplied across several assets.
Which Commercial Property Survey Should You Choose?
- If you are buying commercial premises, consider a pre-acquisition inspection with condition and risk advice.
- If you are taking a lease, a Schedule of Condition may help protect your position, particularly where repairing liabilities are extensive.
- If a lease is coming to an end, dilapidations advice may be needed whether you are the landlord or tenant.
- If you need to establish market value, commission an appropriate RICS valuation.
- For borrowing secured against property, the requirement may be a secured lending valuation.
- Where rent or lease terms are changing, rent review or lease renewal advice is likely to be more relevant than a physical building survey.
Why Choose Wignalls for Commercial Property Surveying?
Wignalls Chartered Surveyors has more than three decades of experience in commercial property and advises clients across the UK. Its work ranges from individual landlords and owner-occupiers through to portfolio owners, public bodies, government organisations and major companies.
Commercial property rarely fits into a neat standard package, so the scope should reflect the asset, the transaction and the particular risks involved.
Just as importantly, the commercial service is not limited to producing an inspection report. Wignalls provides advice across acquisitions, commercial valuations, secured lending, rent reviews, lease renewals, dilapidations, disposals and property management.