The Hidden Costs of Commercial Properties
Buying a commercial property in London is an exciting opportunity, but it’s important to be aware that the asking price is just the start of your financial commitment. Alongside the purchase cost, there are several additional expenses that can significantly impact your budget and ongoing profitability. At Field & Sons, we help clients navigate these hidden costs to make smarter property decisions.
Service Charges and Management Fees
One of the most common and sometimes unexpected costs comes from service charges. These fees cover the upkeep of shared spaces such as entrances, corridors, lifts, and exterior maintenance. The amount you pay varies widely depending on the size of the building, the services provided, and the property’s age. Some properties have elaborate communal areas that require more extensive maintenance, which can increase charges.
In addition, many commercial properties have management fees charged by the property management company. These fees cover administrative tasks, ensuring compliance with regulations, and organising repairs or maintenance work. Understanding these fees upfront can help you avoid surprises when the bills arrive.
Maintenance and Repairs
Maintenance is another important factor. All buildings require regular upkeep to remain safe, functional, and compliant with health and safety standards. Maintenance costs cover everything from cleaning communal areas to fixing plumbing, heating, or electrical systems. Older commercial buildings tend to need more frequent repairs, so budgeting for this is essential.
Some leases require tenants to cover certain maintenance costs directly, so it’s important to clarify responsibilities when negotiating terms. Unexpected repair bills can quickly add up, so a reserve fund for repairs is always advisable.
Local Taxes and Business Rates
Local taxes, especially business rates, can be a major ongoing expense in London’s commercial property market. Business rates are calculated based on your property’s rateable value and charged by the local council. These rates are subject to annual review and can vary considerably depending on the area and property type.
