Should you buy your business premises?
Buying your business premises means taking out an owner-occupied commercial mortgage so your company owns the building it trades from, rather than renting it. For many established businesses this is a powerful move: instead of paying rent to a landlord, you build equity in an asset you control. It is assessed on the affordability of your business, and typically requires a deposit of 25 to 30 percent of the property value.
The benefits of buying rather than renting
- Build equity: mortgage payments buy an asset, rather than disappearing as rent
- Control: you decide on fit-out, alterations, and use, without a landlord's permission
- Stability: no rent reviews, lease renewals, or risk of being asked to leave
- Potential cost saving: mortgage payments can be comparable to or lower than rent over time
- Investment upside: the property may appreciate and can be let out or sold later
The trade-off is that a deposit ties up capital, and you take on responsibility for the building. Weigh this against your cash needs and growth plans. Our comparison of owner-occupied versus investment mortgages explains the wider picture.
How lenders assess an owner-occupier purchase
For an owner-occupied deal, the lender is judging whether your business can comfortably afford the mortgage. They will typically review:
- Two to three years of business accounts and recent management figures
- Business and personal bank statements
- The current rent you pay, as a benchmark for affordability
- Forecasts, particularly if the business is growing or recently changed
- The property itself as security
A key test is whether your trading profit covers the mortgage with a comfortable margin, often stress tested at a higher rate. If you currently pay rent similar to the proposed mortgage, that is a strong signal of affordability.
How much deposit do you need?
Owner-occupied commercial mortgages typically reach up to around 70 to 75 percent LTV, so a deposit of 25 to 30 percent. On a 400,000 pound premises, that is roughly 100,000 to 120,000 pounds. Additional security, such as another property, can sometimes reduce the cash required. See our process guide for what happens next.
Buying through a pension
A popular strategy for owner-occupiers is to buy the premises through a Self-Invested Personal Pension (SIPP) or Small Self-Administered Scheme (SSAS). The pension owns the property and leases it back to your business, so rent flows into your pension in a tax-efficient way. This can be combined with a commercial mortgage taken out by the pension scheme. Our guide to buying commercial property through a pension explains how.
The purchase process
The process mirrors any commercial mortgage: package your case, match to lenders, obtain a decision in principle, complete a valuation, work through the legals, and draw down. For an owner-occupier, having clean, up-to-date accounts and clear forecasts is the fastest route to approval. Our full step-by-step process guide covers each stage.
Funding your purchase with Assesr
Buying your premises is a significant step, and getting matched to lenders comfortable with your sector and figures makes all the difference. Assesr builds a lender-ready credit paper in around 60 seconds and matches your owner-occupier commercial mortgage to specialist lenders, at a quarter of the typical broker fee. You pay the 0.5% Assesr Fee on drawdown, nothing until your deal completes.
Frequently asked questions
Is it better to buy or rent my business premises?
It depends on your cash position and plans. Buying builds equity, gives control, and can be cheaper than rent over time, but ties up a deposit and adds responsibility for the building. Renting keeps capital free and flexible.
How is affordability assessed when buying business premises?
Lenders look at the trading profit of your business, usually over two to three years, and check whether the mortgage payments are comfortably affordable, often with a margin against a stress rate.
Can I buy my premises through a pension?
Yes. Commercial property can be held in a SIPP or SSAS, and the pension can even lease the premises back to your business. This is a common strategy for owner-occupiers, covered in our pension property guide.