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Buying a commercial property can be a great investment or an excellent way to secure premises for your business. However, purchasing a commercial property can also be a daunting or unclear process. Therefore, you may be unsure where to start. This article will outline four steps that you should take when you want to buy a commercial property in New Zealand. 

1. What Do You Want to Purchase?

First, you should consider the type of commercial property that you wish to purchase. There is a range of property types that you can choose from, such as:

  • office spaces;
  • industrial spaces, ranging from smaller warehouses to heavy industrial premises;
  • retail spaces. If you are interested in purchasing a retail space, you may wish to look at premises in shopping centres or other shared developments. These premises are known as unit title property. There are additional obligations that accompany being a unit title owner. For example, having to form and participate in a body corporate with the other unit title owners in your building and contributing to an annual body corporate levy to maintain your shared premises;
  • hotels and motels; and
  • development projects.

Additionally, to assist you in answering this question it may be useful to consider:

What You Wish to Use the Property For Is the property going to serve as premises for your business or an investment property? If it is going to be an investment property, you may wish to take on a space that commercial tenants already occupy.
The Location or Locations That You Want to Own Property In If you are purchasing premises for your business, it is best practice to pick a location that suits your business type and demographic.
Your Budget Your budget should consider the purchase price, GST and any additional costs that may accompany purchasing commercial property.

2. How Do You Want to Purchase This Property?

There is a range of ways that you can purchase and own property. For instance, you may wish to buy your commercial premises:

  • as an individual or a sole trader;
  • as a partnership you have with another individual; 
  • through your company; or
  • through a trust. 

Each ownership model accompanies different benefits and obligations. Therefore, it is essential that you are aware of these obligations before you decide on your preferred ownership structure.

For example, if you purchase commercial premises as a sole trader and run your own business out of that space, you will be responsible for any debt that your business gets into. In contrast, if you purchase and operate out of premises under a company, the company itself is responsible for debts owed.

3. Due Diligence

At this stage, you are ready to look at properties that meet your personal criteria and ownership model. Once you have found commercial premises that fit into these requirements, you will have to carry out due diligence. Due diligence is the process of investigating a property before you commit to purchasing it. In carrying out due diligence, it is best practice to:

  • secure a building report on each potential premise. This report will aid in uncovering any issues with the property that require repair or would dissuade you from purchasing that space; 
  • obtain a LIM, or Land Information Memorandum, report from your local council. A LIM report is a summary of the details that the council holds on your potential properties, such as the rates or the premises’ potential to experience erosion or flooding; and
  • review the sale and purchase agreement. This agreement will contain the obligations, or conditions, that you will have to fulfil before you can purchase the property. These conditions may include paying a deposit or securing a LIM report. 

4. Professional Help

To assist in your due diligence, you should obtain professional advice. You may wish to obtain expert help from a:

Qualified Builder A builder will be able to carry out a thorough inspection of each potential property and provide you with a detailed, written building report.
Conveyancer A professional conveyancer will be able to assist you in obtaining a LIM report from your local council.
Property Lawyer It is best practice to have an experienced property lawyer look through your sale and purchase agreement. Your lawyer will be able to inform you of your obligations under the agreement and assist in negotiating any changes on your behalf with your seller.

Once you have found a property that meets your criteria, carried out due diligence and acquired professional advice, you are now ready to purchase commercial property.

Key Takeaways

Buying commercial property is an exciting and daunting process. If you are interested in purchasing commercial premises, you should:

  • consider the type of commercial property that you wish to purchase;
  • consider the business structure that you wish to purchase the property under; 
  • carry out due diligence on any prospective properties; and
  • obtain professional advice.

If you are interested in purchasing commercial premises, contact LegalVision’s property and leasing lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

Is buying commercial premises a good investment?

Buying commercial property can be an excellent investment if done properly. If you do wish to purchase a commercial investment property, you may want to look at properties that are already occupied by tenants. 

How do you buy a commercial property?

If you are interested in purchasing commercial premises, you may wish to consider the type of property that you wish to purchase and the business structure that you wish to purchase the property under. Further, you should carry out due diligence on your prospective properties and obtain professional advice.

What types of commercial property can I buy?

There is a wide range of commercial properties that you can buy, such as office spaces, industrial spaces, retail premises, hotels and motels and development projects.

How can I buy commercial property? 

You can buy commercial property as an individual or a sole trader, through a partnership, through a company or through a trust.

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