Of all the decisions you'll have to make as a business owner, there are few that will affect your business quite as deeply as the decision of whether to rent your business premises or buy them outright. Your business premises, the location where you do business, is integral to the success of your company.



The rental or mortgage payment is likely to be one of your most significant expenses - right at the top of the list with staff wages and materials. Your business premises is very likely to become your largest fixed asset if you choose to buy your property outright. On the other hand, if you don't own your property, you may be able to offset the lower assets with lower expenses for building and structures cover and repair expenses. Those aren't the only differences between renting your business premises and buying them.

Renting

The biggest advantage to renting the premises for your business is flexibility. When you rent, it will be far easier to move premises at will. In addition, depending on your lease, you may be paying less in insurance costs, since you only need to insure your own property, and not the building as well. Finally, the owner of the building will be responsible for maintenance and upkeep costs. Those savings, though, will be offset by the fact that your business doesn't benefit from any increase in value of the property. This could be even more important if your business invests in improvements to the property in order to further your own business interests.

Startup companies can most benefit from renting their premises rather than buying them. Raising capital is difficult enough without having to raise capital for purchase of business premises. Even if one is lucky enough to find a good 100% commercial mortgage, there are generally requirements for assets that may make it difficult to remain liquid enough to do business successfully.

Renting properties gives a new business owner the advantages of lower expenses, more flexibility and less responsibility for upkeep of the premises themselves. On the other side, you could find yourself subject to unexpected rent rises, particularly if expenses rise for the building owner.

Buying

The advantages to buying your own business premises are also many. For starters, mortgage repayments on a commercial mortgage are likely to be close to, if not actually less than, your current rental payments.

A purchased property offers the opportunity to bring in extra income in the form of sublets to other tenants, an option not available to renters. Subletting allows you to finance your mortgage by renting to others. You'll also see savings in taxes, since interest payments on your commercial mortgage are tax deductible, while rental payments are simply another business expense.

Any improvements that you make to the property benefit your business rather than a landlord, and any increase in value to your property increases your company's assets.

Of course, buying will cost you more up front, and possibly for the first several years. You will need to make a substantial down payment on your commercial mortgage property, and maintain high levels of insurance until your mortgage is paid off.

Most lenders offer commercial mortgages from ?25k, with terms up to 25 years. If you have additional security, your business may even qualify for a 100% mortgage, saving you the cost of a down payment. You'll find many lenders, from the high street banks to specialised finance companies who offer targeted commercial mortgages, who can help you find a business mortgage that suits your needs at a price your balance sheet can afford.