Commercial property finance costs

Lender and broker charges

Lenders may charge arrangement, valuation, legal and exit fees, and some bridge products have minimum interest periods. Broker fees, where charged, should be explained before you commit, and Sorbus may also receive commission from lenders. Ask for every charge in writing.

Professional costs

You will usually pay your own solicitor and often the lender's solicitor. Surveys, environmental reports, building surveys and insurance add further cost. Complex titles or multiple leases increase legal time.

Land tax and VAT

In England and Northern Ireland, Stamp Duty Land Tax applies under non-residential and mixed-use rules; Scotland and Wales operate separate taxes. VAT may apply to commercial property where the seller has opted to tax, although there are exemptions and exceptions. VAT can change the cash you need on completion even if later recoverable. Your accountant should confirm both.

Hypothetical example, not a real client: a buyer budgets for the deposit, then learns the seller has opted to tax. The VAT due on completion increases the cash required, and the buyer must check with an accountant whether and when it could be recovered.

Ongoing costs

After completion, there are insurance, business rates on empty space, repairs, service charges and management. These affect affordability and the lender's view of your resilience.

Timing of costs

Costs arrive at different points. Valuation and some legal fees are usually paid before any offer, and may not be refunded if the deal fails. Deposits are paid on exchange. Land tax returns and payment are due after completion. VAT, if charged, is typically paid on completion and any recovery comes later through your VAT return. Mapping when each cost falls helps you keep enough cash at each stage.

Comparing offers on more than the rate

Two offers with different rates can cost similar amounts once fees are included, or the lower rate can cost more if fees are high and you repay early. Ask for the total amount payable over the period you expect to hold the loan, including fees, and compare that. Also compare flexibility: early repayment charges, overpayment rights and the cost of extensions can matter more than a small rate difference.

Hypothetical example, not a real client: an investor compares a lower-rate loan with a large arrangement fee against a higher-rate loan with smaller fees, expecting to sell within a short period. The lower-rate option may cost more overall in that scenario.

Costs if the deal does not complete

Not every application completes. Valuations may disappoint, searches may reveal problems or a seller may withdraw. Costs already incurred, such as valuation, surveys and legal work, are usually not refundable. Asking your solicitor and lender which costs are payable at which stage helps you decide how far to go before key risks are resolved.

Hypothetical example, not a real client: a buyer instructs a full survey before ordering a lender valuation, discovers a serious defect and withdraws, losing only the survey cost rather than several sets of fees.

Keeping a simple running schedule of committed and likely costs helps you decide at each stage whether to continue.