The Mrs is looking to buying a small retail business.
It's lease hold and the asking price is £25,000.
Spoke with a solicitor and they have estimated £2,500 - £3,000 + vat for the legal fees.
Is this reasonable? Seems a bit steep to me for something that would appear straight forward. Basically checking a lease and setting up a contract.
What do you mean “it’s a leasehold”? What is she actually buying? A limited company?
What do you mean “it’s a leasehold”?
In that the property is a rental and she is not buying a freehold on a commercial property.
Too many variables to say if it is good value.
I would get quotes from two other solicitors and find out what they'll be doing as part of the purchase.
I would also suggest you speak to an accountant that understands business purchase transactions so they can explain about the allocation of the £25K, i.e. if any capital allowance elections are required and if VAT/TOGC is applicable.
Hopefully the solicitor would have suggested getting an accountant on board.
My question was more is it a purchase of business assets or a purchase of shares in a limited company?
I bought a small business including leasing the property and these were my expenses other than the actual purchase. Just under two years ago and no idea whether I was ripped off or got a bargain
Property Search Fees 388.00
Land Registry Search Fees 5.00
Land Registration Fee - Lease 40.00
Land Registration Fee - Option/First Refusal 40.00
Stamp Duty Land Tax 205.00
Bank Transfer Fee 35.00
VAT thereon at 20% 7.00
Solicitor’s Legal Fees 2,250.00
VAT thereon at 20% 450.00
A grand total of £2,963 plus £457 VAT = £3420
Are you buying the business, or buying the property, or both? Pretty fundamental point that needs clarification.
Seeing as you don't seem to know, how can you offer an opinion on whether or not the fees you've been quoted are reasonable or not?
If that's just for taking on the lease it's top-side. Don't think my Boss has paid more than 1k for that sort of thing.
But as others have said if you are buying a business, taking the lease on, buying stock, buying equipment, checking finances etc. it doesn't sound far out.
I rent out commercial property and the last time a business changed hands the cost of transferring the lease was roughly £1500.
Just as an aside,read the lease very carefully.
I have a tenant,hairdresser,who sold a business in a different property. The buyer lasted 3 months then fled. The lease conditions fell back on my tenant,basically he was responsible for the rent and overheads on the empty property.There were 5 years left on the lease and the property owner wanted £12,000 to allow him out of the lease. He could not re let it himself without the owners consent.The owners continually turned away prospective tenants.
Also,look at who is responsible for building repairs. This,together with buildings insurance can be put on to the tenant.
Leasehold = bad.
Leasehold = bad.
Pretty much all commercial premises are leased.
@gobuchul We have a retail shop. Lease hold, bought for 30k 6yrs ago. Legal fees were £1500 but only because the buisness seller didn't want to pay for his own solicitor, so we had ours draw up the contract for transfer of ownership and there was no legal too and fro between the two parties. We were quoted 2.5k+ if the seller had instructed solicitors as there's more work involved.
The buisness we bought was essentially stock/shopfittings and goodwill - we set up our own ltd co and bought the assets. If it's retail do not buy the ltd co from the seller as you'll also buy any debt the company has with any supplier. We had several suppliers try to chase us for payment after the purchase, as the seller hadn't settled their account.
Regards lease hold, things to look out for are property maintainance - are you or the landlord responsible? Brakes in the lease, when and how often. When and how often are rent increases? Etc.
Regards stock valuation get a professional independent stock taker to do an audit a day or two before the sale - & split the cost of this with the seller. We over valued the stock we purchased as the seller didn't replenish the stock for 2 weeks prior to the sale.
