Many small businesses in the UK could boost their profits by buying the commercial properties they currently rent, it has been claimed.
Small businesses in the UK can increase their long-term profitability by owning their own premises, according to property website publicangel.com.
Recent changes in the commercial mortgage market has led to many businesses being eligible for 100% mortgages where the owners would pay the same monthly amount as they do to rent, the website has claimed.
“In years gone by you would have approached a high street bank for a commercial property mortgage,” says Nilesh Gohil, of Public Angel.
“Without a perfect track record and a hefty deposit, you’d have been turned away.
“These days there are many more lenders available, who are willing to lend 100% of the price of the freehold, secured on the property itself.”
“All of this is making owning your own commercial property a lot more realistic. And that means you’ll be lining your own pocket, not your landlords,” he continued.
However, one high street bank has warned business owners to be wary of taking out mortgages of this kind.
“If property prices fall, as they did in the early 90s a business could quickly be in a position of negative equity, in a similar way as an individual with a residential mortgage,” said Fraser Mackay, head of commercial marketing at Barclays.
“If this happens it limits the ability of the property owner from selling their premises and moving to new ones.
“In other words it could severely limit a business’s flexibility to sell its premises should the need arise,” continued Mackay.
© Crimson Business Ltd. 2006
