There is a question that all business owners must one day face: should I buy or rent my business premises?
If you’re currently struggling with this question, then you may find yourself led towards renting – it is perhaps the more common of the two options, and seems the most cost-effective in the short term. However, there are three particularly good reasons that buying your own premises could well prove to be the better choice for you and your business…
#1 – Long term financial security
Many business owners turn away from buying due to cost-related fears, especially in regards to the deposit of the property. However, while buying is more expensive initially, it can save you money in the long term.
For example, if you rent your premises, there is always the risk of rent rises. If your rent does rise, then you have two choices: the first is to absorb the higher cost, and the second is to move to new premises. Unfortunately, both of these options are time-consuming, expensive, and disruptive to your business, which is far from ideal.
However, if you own your premises, then you know exactly how much you will be paying for your mortgage each month for the foreseeable future. You’re in control, which is far preferable to being subject to the whims of your landlord.
#2 – Greater freedom over how your premises are used
If you own your premises, then you can largely do whatever you wish with the property itself providing you abide by local planning regulations. If you want to change the layout, or add an extension, then you can do so – it’s your property, and you can use it however you believe most suits your business.
In contrast, if you rent, then any changes will need to be approved by your landlord – and the likelihood of such approval being granted is relatively slim.
#3 – Your premises become an asset
If you rent your business premises, then as soon as the rent is paid each month, the money is gone forever. However, if you choose to buy your premises, then the money you pay to the mortgage each month helps to contribute to an asset.
The fact that owning your premises provides you with an asset is inherently valuable, both for your bottom line and – perhaps most importantly – your financial flexibility in future. For businesses who own their premises, accessing funds for business development is simple; with solutions such as business loans or a Max Funding second mortgage, the fact that your business has a tangible asset makes it far more likely you will always be able to secure the funds that you required. Furthermore, owning your premises also means you can sell the property if you ever have reason to do so, so the money you pay for your mortgage will eventually be returned to you in some form.
Renting business premises may be by far the most common option, but as we have seen above, buying could prove to be the better choice for your business’ future.