Freehold vs Leasehold: What It Means When You Sell

Whether you own your premises or lease them has a big impact on how your business is sold, who buys it, and for how much. Here is what sellers need to know.

Selling a freehold business

If you own the property, you can sell the business and the freehold together, or sell the business and grant the new owner a lease while you keep the property as an investment. Including the freehold raises the headline price and widens the appeal to buyers who want the security of owning their premises - but it also requires buyers with more capital.

Selling a leasehold business

With a leasehold business, the value is in the goodwill, fixtures, fittings and trade rather than the bricks and mortar. The terms of the lease matter enormously to a buyer:

• How many years are left to run, and is there an option to renew?
• Can the lease be assigned to a new owner, and on what conditions?
• What is the rent, and when is the next review?
• Are there any unusual restrictions or repairing obligations?

A short or restrictive lease can deter buyers and reduce value. If your lease is close to expiry, it is often worth negotiating a renewal or extension with your landlord before you go to market.

Getting the structure right

The right structure depends on your goals - a clean exit, ongoing rental income, or maximising the upfront sum. A business transfer agent will advise on the best approach for your circumstances and explain how each option affects price and tax.

Get an instant valuation to see what your business could be worth, then talk it through with a local expert.