Compliance issues to address before a commercial property sale

1st March 2024

Preparing your commercial property for sale or refinancing involves addressing a range of compliance matters to ensure a smoother and quicker transaction.

Ensuring that you have all necessary documents and reports in order can significantly impact the speed and success of the process.

Here are some key compliance matters to consider:

Does your property contain asbestos?

Asbestos, a carcinogenic insulation material, was entirely banned in the UK in late November 1999.

However, some properties built before the ban may still contain asbestos.

As you are no doubt already aware, it can pose significant health risks and impact the property’s value and insurability.

If your property contains asbestos, our solicitors, and the Government website, suggest you do the following:

  • If you have a lease or contract, check who is responsible for asbestos.
  • Find out where the asbestos is (you’ll probably need an external accredited surveyor to carry out an asbestos survey).
  • Have the material analysed and keep a record of what you find.
  • Carry out a health and safety risk assessment.
  • Share the information with anyone likely to come into contact with the area, such as builders.
  • Keep anything containing asbestos in good repair or have it sealed or removed.

Not having an asbestos plan in place can lead to a fine of up to £20,000 and imprisonment of up to 12 months, so it’s vital to manage this issue properly.

When it comes to selling your property, an asbestos report identifies if asbestos was used in the construction process, where it is, and its condition.

Providing a clear asbestos report upfront can mitigate buyer concerns, prevent delays in the transaction process, and potentially avoid renegotiation of the sale price.

Is your Energy Performance Certificate (EPC) up to date?

An EPC offers insights into a property’s energy consumption and typical energy expenses, along with suggestions for lowering energy use (and saving money).

Obtaining an EPC is legally required for anyone selling or leasing a property, and a favourable rating can boost the property’s appeal to prospective buyers or renters by indicating reduced operational costs.

Ensuring your property has a valid EPC can prevent delays in the transaction.

As solicitors, we often advise clients on their EPC rating and connect them with our network of surveyors and assessors, so please don’t hesitate to get in touch if you are looking to get a new/updated energy certificate.

Have you got a Fire Risk Assessment (FRA) in place?

Providing a comprehensive FRA can demonstrate to potential buyers or financiers that the property is well-maintained and complies with safety regulations, thereby reducing the risk of legal and financial liabilities later down the line.

An FRA ensures that your property complies with fire safety regulations as it identifies the fire hazards and risks within the property and outlines measures to manage or reduce these risks.

You must keep a written record of your FRA if your business has five or more employees and it should identify the specific fire hazards, the people at risk, and ways to remove or reduce the hazards.

By having clear policies and risk assessments, you can expedite the sale process and show potential buyers that you take this issue seriously.

Why getting your compliance in order is so important

Getting these compliance matters in order before marketing your property for sale or refinancing can lead to a quicker transaction for several reasons:

  • It reduces buyer uncertainty: Comprehensive reports and assessments reduce the uncertainties for the buyer or financier, making the property more attractive and easier to transact.
  • It prevents delays: Having all necessary documents and reports ready prevents delays often caused by the need to conduct these assessments during the due diligence phase.
  • It enhances your negotiation position: Demonstrating that you have managed the property well and addressed compliance issues can strengthen your position in negotiations.
  • It goes a long way in facilitating financing: For refinancing, lenders will be keen to know the property complies with all relevant laws and regulations, as this affects the property’s value and their security.

In essence, addressing these compliance matters before marketing your commercial property can streamline the transaction process, reduce the risk of delays, and potentially lead to a more favourable sale or refinancing outcome.

We can help you with this. As solicitors specialising in commercial property transactions, we have a wealth of experience in preparing our clients’ documents and compliance for sale.

Please don’t hesitate to get in touch with one of our team for further information or tailored guidance for your specific situation.

Our solicitors in Dudley, Cannock, Sutton Coldfield and Lichfield are here to help.