When selling a commercial property, you’ll encounter various fees. These fees can significantly eat into your profit margins.
Here is a comprehensive guide to the fees you can expect to pay when selling a commercial property.
Table of Contents
What Fees Do You Pay When Selling A Commercial Property?
Selling a commercial property involves several expenses that can impact your overall profit. Here’s a breakdown of the main costs:
- Estate Agent Fees: These typically range from 1% to 3% of the property’s sale price. For a £500,000 property, you might pay between £5,000 and £15,000.
- Legal Fees: Solicitors usually charge a fixed fee for conveyancing, which can vary based on the property’s value and complexity of the sale. Expect to pay between £1,500 and £5,000.
- Energy Performance Certificate (EPC): This is mandatory and costs around £150 to £200.
- Capital Gains Tax: If you’re selling an investment property, you may be liable for Capital Gains Tax on the profit. Basic rate taxpayers pay 10%, while higher and additional rate taxpayers pay 20%.Mortgage Redemption Fee: If you’re paying off your mortgage early, you might face a redemption fee. This can be a percentage of the outstanding balance or a fixed amount.
Here’s a table summarising these costs:
| Fee Type | Typical Cost |
|---|---|
| Estate Agent | 1-3% of sale price |
| Legal Fees | £1,500 – £5,000 |
| EPC | £150+ |
| Capital Gains Tax | 10-20% of profit |
| Mortgage Redemption | Varies |
Additional costs you might encounter include:
- Repairs and renovations: You might need to spruce up your property to make it more attractive to buyers.
- Removal costs: If you need to clear the property of furniture or equipment.
- Surveys and reports: Depending on the property, you might need asbestos surveys or other specialist reports.
- VAT: While most commercial property sales are VAT-exempt, there are exceptions. Get professional advice on your specific situation.
It’s worth noting that fees can vary depending on your location, the type of property, and current market conditions.
Energy Performance Certificate (EPC)
An EPC is a legal requirement when selling a commercial property. This certificate provides information about the property’s energy efficiency and typically costs between £150 and £200. The EPC must be in place before you can market your property.
Capital Gains Tax
If you’re selling a commercial property that’s increased in value since you bought it, you may be liable for Capital Gains Tax. The rate depends on your tax bracket – basic rate taxpayers pay 10%, while higher and additional rate taxpayers pay 20% on the profit. There are ways to reduce this tax, such as using your annual tax-free allowance or claiming certain reliefs.
Mortgage Redemption Fees
If you’re paying off a mortgage early to sell your property, you might face redemption fees. These can be substantial, so check your mortgage terms carefully. Some lenders charge a percentage of the outstanding balance, while others have a fixed fee.
How can I reduce selling costs?
There are several ways to potentially lower your selling expenses:
- Negotiate agent fees
- Shop around for the best legal rates
- Consider online estate agents for lower fees
- Prepare documentation in advance to reduce legal costs
- Time your sale to avoid early mortgage redemption fees if possible.
Do I need to pay VAT when selling a commercial property?
Most commercial property sales are VAT-exempt. However, if the property is new or has been opted to tax, VAT at 20% may apply. It’s best to get professional advice on your specific situation.
What about business rates?
Business rates are typically the responsibility of the occupier, not the owner. If your property is vacant, you may be liable for these until the sale completes. Some properties may qualify for business rates relief.
Are there any tax reliefs available?
You might be eligible for certain tax reliefs when selling a commercial property:
- Business Asset Disposal Relief (formerly Entrepreneurs’ Relief)
- Roll-over Relief
- Hold-over Relief
These can potentially reduce your tax liability, but each has specific criteria you must meet.
What if I’m selling a leasehold property?
If you’re selling a leasehold commercial property, you may face additional costs:
- Lease assignment fees
- Service charge arrears
- Ground rent arrears
- Landlord’s consent fees
Always check your lease agreement for any specific requirements or costs related to selling.
How do auction fees differ?
If you choose to sell your commercial property at auction, the fee structure is different:
- Entry fee: £200 – £500
- Commission: Usually 2% – 2.5% of the sale price
- Marketing fees: Can range from £300 – £500
Your Commercial Property’s Knight in Shining Armour
Auctions can be a quicker way to sell, but it’s important to set a realistic reserve price. You can sell your commercial property quickly without using an agent by using a professional commercial property buyer.
Selling your commercial property to Property Saviour can offer several benefits. We buy any problematic property quickly for cash within 10 days or at a timescale that suits you. There are no estate agent fees, no surveys, and we’ll pay at least £1,500 towards your legal fees.
We’re real cash buyers, meaning there’s no borrowing from banks or bridging loan companies. Unlike our competitors, we always honour the price we agree on and will never lower it before the exchange of contracts.
If you’re looking for a hassle-free sale of your commercial property, get in touch with Property Saviour today. We’re here to help you navigate the selling process with ease and efficiency.
Sell with certainty & speed
Property Saviour Price Promise
- The price we’ll offer is the price that you will receive with no hidden deductions.
- Be careful with ‘cash buyers’ who require a valuation needed for a mortgage or bridging loan.
- These valuations or surveys result in delays and price reductions later on.
- We are cash buyers. There are no surveys.
- We always provide proof of funds with every formal offer issued.
We'll Pay £1,500 Towards Your Legal Fees
- No long exclusivity agreement to sign because we are the buyers.
- You are welcome to use your own solicitor.
- If you don’t have one, we can ask our solicitors for recommendations.
- We share our solicitor’s details and issue a Memorandum of Sale.
Sell With Certainty & Speed
- Our approach is transparent and ethical, which is why sellers trust us.
- 100% Discretion guaranteed.
- If you have another buyer, you can put us in a contracts race to see who completes first.
- Complete in 10 days or at a timescale that works for you. You are in control.
