Looking to invest in a commercial property in Birmingham? Discover why the city and surrounding areas provide an ideal spot to base your business.
For any company to function effectively, the premises to conduct operations and business activity must be selected appropriately.
Whether it’s industrial space or a corporate office, finding the right place for your business to fulfil its requirements is essential.
The UK boasts one of the largest commercial property markets in Europe. As a city, Birmingham has experienced exponential commercial growth in recent years, with its value soaring from £280 million in 2016 to £1.2 billion in just one year.
But before you invest, it pays to understand the process. With this in mind, here’s everything you need to know about buying a commercial property in Birmingham.
What Is a Commercial Property?
Commercial property is a building or piece of land used solely for business activities. Both of which can be purchased or rented.
By housing businesses, commercial property enables companies to generate profits and conduct operations within a defined area restricted to business operations only.
For example, a list of commercial properties may include the following:
· Offices
· Warehouses
· Supermarkets
· Industrial estates
· Shopping centres
Compared to residential property, there are separate laws, policies and taxes when buying a commercial property.
For starters, costs are higher for commercial properties.
Secondly, further policies and laws are relative to the clear distinction between a residential property defined as a liveable space for tenants and homeowners. While on the other hand, commercial properties are dedicated spaces for business activities only.
In some rare occurrences, the two can mix.
How Do You Get a Commercial Mortgage in Birmingham?
If you desire to purchase or re-mortgage commercial premises in Birmingham, you require a commercial mortgage. Acquiring a commercial mortgage is like taking out a regular residential mortgage.
However, there are two types of commercial mortgages available:
· Owner-occupier mortgages – A commercial property to be used as a trading premise.
· Commercial investment mortgages – Used for the property with intent to rent.
During this process, you can expect to pay various fees, including:
· Arrangement fees
· Valuations fees
· Legal fees
· Broker fees
Before applying, you’ll need specific documentation and information to hand, including:
· Proof of identity and address
· Lease or tenancy agreement
· Commercial bank statements (3 months)
· Trading figures (3 years)
· A business plan predicting future company performance for profits and expenditure
To apply for a commercial mortgage, you will need to follow these necessary steps:
1. Go online and complete the Asset and Liability form
2. Complete the commercial mortgage application form
3. Provide relevant information on your business
4. The commercial property is then valued
5. Solicitors will then carry out any legalities with due diligence
6. The bank offers a mortgage agreement
Generally, commercial mortgages can become quite complicated. So, carefully consider your options and seek help from a reputable Birmingham commercial mortgage advisor.
A commercial mortgage broker can help you find the highest loan to value (LTV) rating available in your desired region.
How Much Deposit Do I Need?
The average deposit for a commercial mortgage is between 25% and 40% of the property value. Commercial deposits for property in Birmingham sit at around 30%.
Most lenders will provide owner-occupier mortgages with LTV values between 70-80%. However, with commercial investment mortgages, it’s unlikely this ratio will reach over 75%.
The amount of the deposit will depend on the value of the property and what types of business mortgage you wish to claim, combined with your reputation and experience as a business owner.
Remember, investment mortgages tend to be a higher risk with both types of commercial mortgages available, so you’ll probably receive a worse rate.
What Are the Types of Commercial Properties in Birmingham?
Birmingham is a thriving business hub in the West Midlands with a versatile range of commercial properties for sale.
Offices
Birmingham city centre is jam-packed with ambitious young professionals, entrepreneurs, and businesses looking to make a mark on the city.
With excellent transport routes, aim for office units in the city centre or surrounding regions such as the Jewellery Quarter, Digbeth, and Westside.
Retail
If you’re in the retail industry and looking to establish a commercial property in Birmingham for your business, then we’re glad to inform you that Birmingham is a shopper’s paradise.
The retail sector in Birmingham boomed in 2019 with a £2.1 billion turnover.
While many consumers circulate through the city centre and Bullring areas, Birmingham’s healthy expansion means almost anywhere in and around the city can provide a profitable investment for retail brands.
Industrial
Birmingham’s proud history as an industrial city means its already well-established for industry-based commercial property.
Whether you seek a warehouse or a factory, numerous options are available in and around the city for industrial operations, with numerous links to manufacturing and production networks.
Leisure
Whether it’s hotels, pubs, restaurants, cafes, or sports facilities, the city and surrounding boroughs provide plenty of potential for commercial investors in the leisure industry.
Birmingham’s rapid improvement can be seen in the investment in the leisure sector, generated by the healthy regeneration developments alongside hosting the Commonwealth Games in 2022.
Healthcare
With healthcare regarded as Birmingham’s largest industry, there’s enormous investment potential in commercial property.
To put this into context, 62.5% of businesses in the health care sector that launched in 2011 continued to operate five years later.
Reports show that Birmingham and the rest of the West Midlands healthcare sector are becoming the UK hub for health technology and life sciences.
Speak to a Specialist Commercial Property Broker
Birmingham Money provides "simple and smart advice" for commercial property investments within Birmingham and surrounding boroughs. Our expertise in the local area to provide trusted and reliable insight to all our commercial clients is why you can rely on our quality service to base your business here.
Get in touch today if you need advice on finding the best commercial property opportunities in Birmingham and securing a top mortgage rate.