The Costs of Buying a Freehold Business

Build your completion cash budget

Build a completion budget around the agreed business and property price, then separate your deposit, transaction costs, stock and working capital. This article focuses on the cash you need to complete and take over, rather than how to value the business or choose a mortgage.

For the ownership, valuation and finance overview, start with Buying a Freehold Business.

The costs of buying

Beyond the agreed price, budget for the deposit (usually your own money — the rest can be financed), plus the professional costs of getting the deal done properly:

• —Acquisition deposit — ranging from 5% to 30% of the price, from your own funds
• —Stock — counted and valued independently on handover day, paid on top
• —Building survey — roughly £1,000–£1,500, and worth every penny on an older building
• —Solicitor — around £2,000–£3,000 for the contracts, title and registration
• —Accountant — often ~£1,000 for reviewing the numbers and setting up your company
• —Stamp Duty (SDLT) — a tax on the property part of the price only, not the business
• —Land Registry fee — a few hundred pounds to put the property in your name
• —Business valuation — sometimes needed by your lender

A worked example

Say you're buying a freehold café for £500,000, split £350,000 for the building and £150,000 for the business. An illustrative budget using a 25% acquisition deposit, not a quoted lending offer:

• —Deposit at 25%: £125,000
• —Stamp Duty on the £350,000 building: about £7,000 (nothing on the first £150k, then 2% and 5% bands)
• —Solicitor, survey, accountant and Land Registry: about £5,000
• —Stock at valuation: perhaps £5,000
• —Working capital and setup (see below): around £20,000
• —Total to complete: roughly £160,000 — of which £125,000 is your deposit

The costs of taking over

The quiet killer of new owners isn't the purchase — it's the first month. Until your takings start landing in your account, you need cash on hand for wages and suppliers. Two to three months of running costs is a sensible reserve.

• —Working capital — wages, suppliers and a buffer for the unexpected
• —Insurance — buildings, contents and business cover become yours to arrange
• —Utilities — some providers ask new owners for a deposit up front
• —Tills and systems — card machines, EPOS software, broadband and subscriptions may need transferring or replacing
• —Licences — alcohol, food registration or healthcare licences may need transferring or re-applying for before you can trade

The costs of owning the building

No landlord also means nobody to call about the roof. Your survey will flag what's coming; budget for early repairs, any refurbishment you want for the relaunch, and the steady drip of compliance — fire safety, gas and electrics, waste and planning.

So how much do you need?

There's no single figure — it depends on the price, the building's condition and how much stock and setup the business needs. The discipline is simple: list every cost that applies before you commit your funds, and keep the working capital reserve sacred.

If you're weighing up a freehold purchase and the numbers are close, talk to us — we'll tell you plainly what a lender would make of it.

For a sector-specific view of how this works in practice, see our page on Commercial Property acquisition finance and loans, including how lenders assess these deals and the areas we cover.