This guide outlines the key steps commercial property buyers should take before completing a transaction — covering legal, financial, and physical checks. Following this checklist could save you from costly surprises down the line.

1. Legal Due Diligence

Before signing any contracts, your solicitor should conduct comprehensive legal investigations into the property:

• Title and Ownership: Confirm legal ownership and title boundaries via the Land Registry. Check for restrictive covenants, easements or rights of way.
• Planning and Use Class: Review current planning permissions and any outstanding enforcement notices. Confirm the property’s use class (e.g., E, B2) and ensure it suits your intended use.
• Tenancies and Lease Terms: Examine all existing leases or licences to occupy. Note rent levels, break clauses, rent review dates, and obligations (e.g., repairs).
• Environmental and Contamination Reports: Commission environmental searches to identify risks like flooding, contamination, or asbestos.
• Building Regulation Compliance: Ensure any alterations or extensions comply with building regulations and were approved.

2. Financial Due Diligence

Understanding the financial health and viability of the property is crucial:

• Valuation: Obtain a professional valuation to assess market value and ensure you’re not overpaying.
• Yield and Rental Income: If the property is tenanted, analyse rental income, occupancy rates, and service charge recoverability.
• Running Costs: Review utility costs, business rates, and service charges to assess total ongoing costs.
• Tax Implications: Consider Stamp Duty Land Tax (SDLT), VAT status, and potential capital gains implications.

3. Physical and Structural Due Diligence

Even visually sound buildings can hide issues. A thorough survey is essential:

• Building Survey: Commission a full structural survey to detect issues like subsidence, roof damage or damp.
• Services and Utilities Check: Confirm heating, electrics, water and internet infrastructure are in working order.
• Asbestos and Fire Safety: Ensure compliance with health and safety standards, including asbestos reports and fire risk assessments.

4. Commercial and Operational Considerations

Aligning the property with your business goals is just as important:

• Location and Accessibility: Evaluate local amenities, transport links, and footfall.
• Market Demand: Assess demand in the area for your intended use — whether retail, office or industrial.
• Development Potential: If considering redevelopment or change of use, consult planners and architects early.

5. Final Steps Before Exchange

• Ensure your solicitor has addressed all legal and technical queries.
• Review heads of terms and the sale contract carefully.
• Confirm finance arrangements are in place.
• Set a realistic completion date.

Get Expert Help

Navigating commercial property due diligence can be complex — but you don’t have to go it alone. At PSS Commercial, we help buyers secure sound investments with confidence.

If you’re considering a purchase and want expert support, contact PSS Commercial today to discuss your requirements.