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Shops selling a wide variety of goods and services can be found throughout the UK, from city centres to rural locations and more. If you own a shop, whether it’s leasehold or freehold, and you would like to sell it, you should be aware of some possible hurdles involved with selling. This guide shows how to overcome those barriers and get a fast and fair sale of your shop.
- Making the decision to sell your freehold or leasehold shop
- Preparing information about your shop for buyers
- Getting your shop ready for potential buyers
- Will you pay Capital Gains Tax after selling a shop?
- Four typical methods of selling your shop
- Top questions and answers about selling a shop
Making the decision to sell your freehold or leasehold shop
Shops are a type of retail property in the UK where goods or services are offered for sale at various prices.
It’s a very broad category that can include many different types of businesses that you can find on the high street, from sandwich vendors to travel agents and much more. Shops can vary tremendously in size, from just a few hundred square feet to multiple floors, and they could be located in busy city centres, in suburbs, on retail parks, and many other different locations.
On a national level, shops are defined in a law called The Town and Country Planning (Use Classes) Order 1987, which outlines various "use classes" of businesses. Shops have their own category in the law, and they include travel agencies, sandwich or other cold food sellers, post offices, funeral directors, businesses selling personal goods or articles, clothes cleaning and repair services, and more.
Your shop might be either a freehold or leasehold property, and it’s useful to know which you have before trying to sell it. You have a freehold shop if you are the outright owner of the building in which the shop is housed, and the land on which the building sits. By contrast, you have a leasehold shop if you own the building for a set period of time, usually many years, in exchange for paying the freeholder of that property an annual ground rent.
Whether you’re the owner of the shop property and the business operating in it, or simply own the building and someone else runs a shop out of it, there might come a time when you are ready to sell up. Some common reasons for wanting to sell properties include needing to raise funds for retirement, trying to get out of financial difficulty, or relocating to another city.
Whatever your exact reason for wanting to sell your shop, this guide will walk you through the steps involved with trying to find a buyer. And you’ll get some crucial tips that could increase your prospects of being able to sell your property quickly and at a competitive price.
Preparing information about your shop for buyers
One of the earliest actions that you should take when getting ready to sell your shop is preparing as much information as possible that you can give to potential buyers.
There are likely two leading types of buyers that might be interested in your shop; people that would like to continue using the property for their own business within the defined category of shops, and developers who may be looking to make major physical changes to the property and redevelop it for other uses, for example converting it to office space or even turning it into a residential property.
No matter which of the two categories of buyers that show interest, they will have many questions about your shop and it’s better that you answer them as quickly as possible. The longer that a prospective buyer has to wait to obtain information about your shop, the more the odds increase that they’ll lose interest and start to look at other properties instead.
Buyers who would like to run their own shop at your property will have a keen interest in the economics of your business. They’ll want to know how the shop is typically affected by fluctuations in the national and local economy as discussed by Sky News, as well as learn about your average annual sales and revenue figures, the availability of staff, and related issues that will help them predict whether their shop at your property would be a success.
Alternatively, buyers that are thinking about your shop as an investment opportunity that they can redevelop for other purposes will likely care less about how well your business is doing, and instead they’ll likely want to know more about factors that could limit or help their redevelopment plans. Such information could include whether or not you have planning permission for physical changes to the property, as well as details of any local restrictions on changes to the property.
Getting your shop ready for potential buyers
It’s possible that your property has some issues that buyers might consider to be a major problem that discourages them from wanting to make an offer on the shop.
Such issues can include, but are not limited to, selling with high levels of radon, subsidence, being located in a high risk flooding zone, dry rot, a bad roof, elevated amounts of asbestos, cladding, various other types of structural damage, and other flaws that have the potential for being repaired.
You will have to make a choice about whether to try selling your property "as is" in its current condition (as discussed on RealEstateWitch), or investing the effort, money and time in addressing whatever issue it has – for example, replacing missing roof tiles.
If you don’t do any repair work to your shop, you might have to be prepared for receiving lower price offers from potential buyers. That’s because anyone looking to buy your shop will be thinking about how much money they will have to spend on fixing whatever the problem is once they own the property, and they’ll typically subtract this amount from their offer.
Alternatively, if you invest in remediating any physical problems with your shop, this can eliminate buyers’ concerns and hopefully result in your receiving better price offers.
However, not every shop owner will have the time, money or willingness to embark on what could be a major repair project before trying to sell their property. And there are zero requirements that commit you to remediating any problems ahead of seeking a buyer.
If you aren’t going to do any repair work, one way is to sell your shop to a quick property buyer. These companies, like LDN Properties, make speedy and fair offers to buy almost any type of commercial or residential property no matter its condition, age, shape, type or size. With this method of selling, you could still receive a competitive price for your shop even sold as is.
Separate from any repair work, every shop owner should make their property look in its best possible condition before attempting to find a buyer, as appearances matter. A property that is not kept in good condition will make some people think it is not worth as much as you might be asking for with the sale price, or it can even make other buyers completely lose interest.
Inside the shop, be sure to make the space as uncluttered as possible, and appearing clean and well maintained. Outside the property, paint over any chipped paint, replace any broken windows, and mow and weed any green space that may be attached to the shop. All of these simple, quick and often zero cost steps can help to make your property appear much more enticing and valuable to potential buyers, potentially resulting in better price offers.
Will you pay Capital Gains Tax after selling a shop?
Whenever you sell any type of residential or commercial property, one element that you need to review is whether you might be liable for paying Capital Gains Tax. This is a fee that the UK government charges to any profit, also called gain, made on the sale of an asset, which is a physical thing like a property or car.
You should consult with a financial professional to learn about your potential Capital Gains Tax liability with the sale of your shop, including whether there might be any ways to reduce or eliminate what you owe. Also, if your property sells at a loss or you are only able to break even on the sale compared to what you first paid for the shop, you won’t owe this tax.
Four typical methods of selling your shop
After you have followed the previous steps in this guide and you are ready to sell your shop, the next important decision that you will have to make is choosing an option for finding a buyer.
The selections are selling to a quick property buyer, using an estate agent, selling on your own, or selling at a property auction. You will discover that there are unique benefits that are associated with each of these choices, and also some noticeable drawbacks with a few of the methods, such as requiring that you pay commission to a third party for finding a buyer.
To find the right option for your situation, first write down the most important factors about your sale, such as how quickly you would like to find a buyer for your shop, and whether you are willing to pay any fees when selling. Then compare all of this information against the specifics of the four choices below and you should find the approach that best matches your needs.
Selling to a quick property buyer
Quick buyers, like LDN Properties, have the financial resources to immediately make fast and fair offers for buying shops and almost any other type of freehold or leasehold commercial (including nursing homes) or residential property.
This means they don’t have to wait to get approved for a mortgage to complete the purchase of your shop, which can add many weeks or months to the process. Instead, quick buyers can usually complete the purchase of a shop within a handful of weeks, and that includes the time it takes to exchange contracts, making them a good choice for selling.
Another top advantage of using a quick buyer is that the trustworthy companies will never make you pay any fees, so you can count on receiving the full proceeds from the sale. Compare this to auctioneers or estate agents, who will make you pay fees that will add to your selling costs.
Quick buyers are also a good idea if your shop has any type of potential problem, such as physical flaws like subsidence or being located in an undesirable area. These companies have extensive experience with buying so-called problem properties “as is” in their current state, so you can still get a competitive and fast offer even if your shop fits within this category.
Selling to a quick buyer is also a streamlined, no-stress and hassle-free process that will require minimal effort on your part, compared to other methods of selling that can require effort – for example selling without any assistance will require that you invest a large amount of your own time, money and effort into finding a buyer, which can be a very stressful process.
For your additional peace of mind when selling to a quick buyer, ask individual companies whether they belong to a third party entity known as The Property Ombudsman (TPO). TPO publishes policies that are crafted to guard property owners against falling victim to fraud in the quick buying industry. You should be careful selling your shop to a quick buyer that either cannot prove it is a TPO member or that refuses to join the organisation, because they could be scammers.
Using an estate agent
A second way to sell your shop is via an estate agent, who will prepare a listing that describes your property and includes photographs of the exterior and interior, and then advertise that listing in their office, online and in local newspapers. The estate agent will also organise viewings to take potential buyers on tours of the shop, and field offers from serious buyers.
This is not a speedy way to sell a shop, because you might be waiting for many months or even longer before you get an offer. And there’s always the danger that the buyer could withdraw their offer and walk away without any legal recourse up until contracts are exchanged.
Estate agents will also require that you pay them commission for successfully selling your shop. This charge will be deducted from the sale proceeds immediately after the purchase is completed, adding to your overall costs with selling.
Beware that some estate agents might overstate the sale price that they think they can get for your shop, which is a trick they do to secure your business so that they’ll be able to profit from charging you commission if they find a buyer for your leasehold or freehold shop.
It is thankfully fairly easy, quick and free to avoid falling for this particular trick. First, you should ask for free sale price quotes for your shop from multiple estate agents. Next, you should visit property sales websites such as Rightmove or Zoopla and note down the current and past sale prices of shops that are similar to yours in the same general neighbourhood. Finally, calculate the average of all these values and you’ll get a much more honest estimated sale price.
Selling on your own
This is usually the most stressful way to sell a shop, because you will have the sole duty to handle every aspect of the selling process from creating and advertising the initial listing through to organising viewings and fielding offers, ideally taking one of them through to completion.
It’s a time-consuming process and you will not be able to simply do it in your spare time, so only choose this method of selling if you have managed to sell shops in the past or you have an experience family member or friend who might be willing to help you out for free. Otherwise, you could be waiting for an entire year or even longer before you are able to sell the shop.
Supporters of this method note that you won’t have to pay anyone commission for selling the property, but this cost saving could be easily wiped out by the expense you’ll face in advertising your shop for sale. And on top of that expense, you also have to consider the toll that the stress of selling on your own can take, which explains why it’s not a very popular way to sell.
If not paying a fee is your top priority, you should consider instead selling your shop to a quick buyer because they won’t charge you any commission and they’ll also help to complete the sale of the property within a handful of weeks, giving you a much more favourable outcome.
Selling at a property auction
Another approach to selling is using a property auction, where people will place bids of increasing value on your shop. This can be a gamble because you don’t know what price your property might ultimately get at an auction, or even if you’ll get any bids on it.
Note that if you don’t receive any bids on your shop then it is considered unsold and you will have to start the lengthy process of starting over with trying to find a buyer.
You’ll be asked to choose a reserve price, which is the lowest value at which you’re willing to sell your shop. Ensure that you select a price that will still generate a suitable return even after subtracting the auctioneer’s fees.
You should ask individual auctioneers whether it might be possible to either pay a reduced amount of commission or have the winning high bidder pay for some of your costs.
This is also often not the swiftest way to sell a property, because there will be a wait of many months between when you first enter your shop for sale and when the auction occurs, followed by a further delay of about 28 days following a successful auction for the winning high bidder to complete all of their legal paperwork and other steps required to finalise the purchase.
Top queries and answers about selling a shop
Homeowners thinking of selling their property quickly may have questions for us, ranging from selling with a business running through to selling in bad condition. These are the main questions we’re asked about selling a shop:
Your top questions when selling a shop
Honest quick buyers, like LDN Properties, will be members of The Property Ombudsman (TPO), which is an independent entity that publishes rules to protect property owners against fraud in the quick buying industry. All TPO members must follow these rules, which should give you extra peace of mind about the safety of selling your shop to a quick property buyer.
