For many prospective business owners, starting a new business can be a very daunting experience. This article will set out some of the things you should think about when putting together your business plan with a view to starting a veterinary practice.
The purchase of a freehold title is when you become the legal and beneficial owner of the property.
When buying a freehold, you are in control of the building, what happens to it and how it is used. Ultimately, you have the benefit of using the property at any time, however, it is important to note that you must check if you have the planning permission to allow you to use the Property as a veterinary practice.
Your solicitor can advise you further on this to ensure that the appropriate planning is in place.
While purchasing a freehold may have its benefits, as part of the business plan you must also consider whether your cash flow is substantial to cover the purchase of the property or whether you will need funding.
When you are granted a lease, you are buying a right to occupy the property for a specified amount of time. Once the lease term comes to an end, you may either vacate the property, or enter into further negotiation with the landlord to renew your lease if it is protected under the Landlord and Tenant Act 1954.
The benefits of being granted a lease is twofold, in that if you do not have the required funds to purchase a freehold taking a fresh lease will be significantly cheaper and you will be guaranteed the right to occupy the Property for an agreed amount of time.
A leasehold offers less commitments and gives the proposed purchaser the opportunity to see how the business is running without having to spend a significant amount of money upfront.
While there may be various benefits to taking a new lease, there may be a requirement for you to enter into a rent deposit deed and personal guarantee. Again, you must ensure that you have the amount of money required to provide the landlord with a deposit prior to completion.
In addition, the drafting of these legal documents may take longer to prepare, and you may be responsible for the landlord’s costs, which is something you will not have to deal as part of a purchase of a freehold transaction.
When the lease comes to an end you will be responsible for any dilapidations and repairing obligation that are specified under the lease, which could be an unexpected financial burden to you.
Company vs individual
One thing to bear in mind is whether you are purchasing the property in a company name or as an individual. For many, the ultimate advantage of buying in your own name is that if later down the line you intend to sell the business you will have option to retain the freehold in your personal capacity and possibly grant a lease.
To conclude, it really depends on your personal circumstances, preference and financial standing. You must also consider the size of the practice, location, suitability and whether the property requires any alterations to the planning to allow for the use a vet practice.