A Guide To Buying Commercial Property In Australia

Are you a business owner planning on purchasing a commercial property for your company? Or are you an investor looking to invest in a commercial property in Australia? It’s very important that before buying a commercial property in Australia that you do your due diligence to ensure you are fully informed on what you’re getting into and avoid any unpleasant surprises.

Fortunately, we’ve come up with a buying a commercial property checklist to guide you when purchasing commercial property in Australia. You’ll discover the key factors to consider before the purchase and how to navigate the legal aspects.

When buying a commercial property in Australia, it’s important to consult a skilled commercial lawyer for professional advice.

Key Considerations When Buying A Commercial Property In Australia

Purchasing a commercial property is a huge step in your financial journey and requires proper consideration to ensure the best outcome. Below, we’ve compiled the 4 key factors to consider when buying a commercial property in Australia.

1. Type Of Commercial Property

Select the type of commercial property that best suits your goals and needs. For example, a retail property suited to the goods/services you wish to sell if you want to set up a retail business. The types of commercial properties include:

  • Office spaces
  • Retail property
  • Industrial property
  • Manufacturing

2. Budget And Payment Plans

Ensure you’ve budgeted enough funds for the purchase of the property and other purchase-related costs like the initial deposit, lawyer fees and taxes.

You might also consider taking a commercial property loan to fund the property. It’s important that you speak to a mortgage broker, bank or other lender/financial institution prior to the purchase to ensure you have a good repayment strategy, as missed payments can lead to penalties or a bad credit score.

3. Conduct Your Due Diligence

It’s important to conduct due diligence before settling on a specific property. Research the historical performance of the property and similar establishments in the area. Check factors such as annual yields, capital growth performance in your desired location, and tenants’ history.

Inquire whether there are any limitations on modifying the property, this can be important if you wish to do any further renovations or building works on the land/premises in future. And confirm that the property fulfils the zoning requirements of the state or territory. Work with a skilled property lawyer to help you conduct due diligence on the property.

4. Location And Condition Of The Property

Consider the commercial property’s location, including its proximity to amenities, transport networks, and target customers. If you’re setting up office spaces, you might require the property to be within the central business district.

Another critical consideration is the property’s condition. Ensure the property has minimal wear and tear to avoid spending thousands of dollars on repairs. The property’s condition can also help you gauge the resale value or rent the property can earn. You may wish to hire an external professional to give you a detailed property report on the condition of all the elements of the property prior to purchase.

Your Legal Guide When Buying A Commercial Property In Australia

Buying commercial property in Australia also requires understanding the commercial laws regarding property purchase. A competent property lawyer can help you navigate signing the contract, paying governmental fees, and understanding your legal obligations.

Contract Of Sale

The contract of sale contains the critical details concerning the purchase. These include the property’s description, settlement date, purchase price, and the terms and conditions for the purchase.

It can also include clauses describing any liabilities or responsibilities of the purchaser. Consulting a lawyer to review the contract of sale, you should have a commercial lawyer review it before you sign it.

Taxes and Stamp Duty

Property purchases usually attract various governmental fees, including Goods And Services Tax (GST) and stamp duty. According to the Australian Tax Office, businesses with turnovers exceeding $75,000 must pay GST.

If GST is applicable, the purchaser will be liable for paying the amount. However, you might not be required to pay GST if the property sale is of a going concern. It’s essential to consult with an expert to understand whether you should pay GST.

You might also be required to pay stamp duty to your state or territorial government. Stamp duty is a tax that’s payable when you purchase or transfer a property in Australia.

Lease Documents

If purchasing property through a lease, carefully review the lease documents and the terms of the lease. An experienced commercial lease lawyer can help you analyse the issues that might affect the lease. These include zoning requirements, the length of the current lease, and any unusual/unfair terms and clauses in the lease document.

Commercial Litigation

You should also ensure that the commercial property you’re buying has no existing litigation that might affect you in the future. Commercial litigation may include shareholder disputes, class actions, or breaches of contract.

It’s advisable to steer away from properties with such issues. Alternatively, you can work with a litigation lawyer to deal with the issues before signing the contract of sale.

Consult Aditum Lawyers When Buying A Commercial Property in AU

Buying a commercial property takes more than identifying a property and making the payment or financial plan. You must conduct due diligence, abide by the commercial property purchase laws, and review the contract of sale.

That’s why it’s essential to consult with a commercial lawyer to assist you navigate the sale/purchase process. At Aditum Lawyers, we have experience helping clients buying or selling commercial property in Australia. If you need assistance, feel free to contact us at 1300 234 886 for a free consultation.

Resources & Further Reading

  1. https://nt.gov.au/property/buying-and-selling-a-home/get-help-with-the-contract/contract-of-sale
  2. https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/how-gst-works
  3. https://business.gov.au/finance/taxation/stamp-duty

 

Disclaimer: The information provided in this article is for general informational purposes only and should not be construed as legal advice. Consult with a qualified commercial lawyer for personalised advice regarding your specific situation.