Why rent offices in Mansfield instead of buying?
Property tends to increase in value over time, so many people choose to buy rather than rent their homes. By contrast, many businesses, including well-established ones, decide to rent offices in Mansfield, rather than buy.
Buying an office may or may not be a good proposition for your business at its current stage of development. Here are some factors to consider when deciding whether to rent offices in Mansfield instead of buying.
The initial costs of renting a serviced office are much lower than the initial costs of buying an office. When renting, all you’ll need to pay upfront is the first month’s rent and, in most cases, a security deposit.
By contrast, the initial costs of buying an office are much higher. You’ll have to pay a large deposit, usually equal to between 20% and 30% of the sale price, as well as legal and other fees.
For an initial period, your monthly costs will be fixed and predictable if you rent a serviced office. You’ll make one fixed monthly payment for your rent and most of the other services and facilities you need, and you’ll know the costs of the additional services you use either regularly or occasionally. This makes your financial planning very straightforward.
If the rent subsequently increases, you can choose to pay extra or move into a less expensive building.
If, however, you buy an office, your future costs will be variable and unpredictable. For example, interest rates on your commercial mortgage may go up and you may need to invest in a new roof or repair flood damage, for example.
However, over the long term, the total costs of buying may be lower than renting and you’ll end up with the building as an asset, which is likely to appreciate in value over time.
Renting an office involves a much smaller, short-term financial commitment than buying an office. All you need to do is ensure you can afford the monthly rent and any extras you may need.
This is a good situation to be in if your business is in its early stages or if it’s difficult to predict how quickly it will grow over the next year or two.
On the other hand, buying an office is a significant, long-term financial commitment. You’ll need to pay a large deposit and arrange a commercial mortgage, which can last for up to 25 years.
Before buying an office, ask yourself if your business is ready to handle that kind of financial commitment. Is it well-positioned for year-on-year growth in the foreseeable future?
If you rent an office, you’ll have access to more working capital than if you’ve invested a significant sum in buying an office. This allows you to pursue more business opportunities when they arise and to expand your business. It should also be easier to borrow money if you don’t already have a large commercial mortgage.
It’s much cheaper to rent an office in a prestigious building in a prime, town or city centre location than it is to buy such an office. Renting gives your business a favourable image and a convenient location without the high price tag.
You can move into a rented serviced office much more quickly than a purchased office. As soon as you’ve paid your first month’s rent, you can move in straight away. Some rented serviced offices are fully furnished and equipped, making it very easy for you and your employees to move in quickly.
If you buy, you’ll need to wait until the sale is finalised before starting to fit out, decorate and equip your office before moving in. This could take several months and will involve a lot of your time and money.
Services and facilities
When renting a serviced office, many additional useful services, amenities and facilities are included in the rent. These may include a fully staffed reception, an on-site café and an office cleaning service.
When you buy an office, you’ll have to provide – and pay for – at least basic facilities and services, such as a reception, toilets, a kitchen, vending machines, and office cleaning.
If you rent a serviced office, you don’t need to worry about property maintenance at all. You’ll never need to arrange for repairs to be made because all maintenance is included in one fixed monthly cost – your rent.
By contrast, if you buy an office, you’ll be responsible for the initial and on-going maintenance of the building. At best, the maintenance costs will be variable. At worst, unexpected costs will arise, possibly when your business can least afford them.
Renting a serviced office gives you much more time to focus on your business than if you buy an office. This is because all the responsibilities of owning property – from the paperwork to the maintenance – take time. This gives you less time to devote to your business.
Renting an office gives you much more flexibility than buying an office. If your business grows rapidly and you need more space, you can move out of a rented office quickly or expand into more offices, within the same building. You won’t need to spend time selling the property.
Also, if you unexpectedly need to relocate or downsize, you can do so quickly – usually with just one month’s notice if you’re renting a serviced office. This will limit your financial losses if you need to downsize.
Should you rent or buy in Mansfield?
Some well-established businesses choose to buy offices, while others decide to continue renting even if they could potentially afford to buy.
If you believe that your business is profitable enough to fund the purchase of an office, ask your accountant and solicitor for advice. You’ll then be able to decide whether you’re in a good position to take on the long-term responsibilities of commercial property ownership because it may be some years before you’re able to sell the office for a profit.