Whether you buy or rent office space in London is a big decision for any company. For either solution, the capital offers many options for businesses looking to base themselves within a bustling city. This article will explore the pros and cons of buying and renting office space in London.
Buying Office Space in London
Pros
• Long-term Investment
Buying office space in London can be a great long-term investment. Property in London can offer potential monetary gains in the future when it is time to sell it.
• Stability and Control
Owning your own office allows you total control over the space. You are free to modify the space as you need with no restrictions. It also provides a stable location to base your company.
• Extra Income from Subletting
If the space you own is too large for your business, you can rent out the parts that you don’t need to generate additional income.
• Assets for Collateral
Owning property can be used as collateral for loans which could help should you need to expand your business.
Cons
• High Upfront Costs
Buying office space in London involves a large upfront cost, which could have an impact on your business’ cash flow.
• Maintenance Costs
By owning the office space, you are responsible for any maintenance and fit-out costs, which can add up over time.
• Lack of Flexibility
Selling office space can be a long process. This can be a disadvantage if you need to move offices quickly.
• Property Taxes and Additional Fees
There are additional costs such as taxes and insurance which come with owning property.
Renting Office Space in London
Pros
• Flexibility
Renting office space in London provides a wealth of flexibility in terms of sizes, locations, and budgets. This makes it easier for you to move or expand as your business grows.
• Lower Initial Costs
When renting an office space, serviced office providers will often ask for a few months' rent in advance as a deposit. This cost is significantly lower than the price of buying an office.
• No Maintenance Costs
When renting an office space, serviced office providers will often ask for a few months' rent in advance as a deposit. This cost is significantly lower than the price of buying an office.
• Access to Prime Locations
Whilst there is a range of office space to buy across London, renting office space allows companies access to locations which may be too expensive to buy such as Mayfair or The City.
• Predictable Expenses
As utilities, rent and service charges are covered in one bill, it is easier to know exactly how much you are spending on your office per month with no surprise charges.
Cons
• Price Rises
The rent cost can increase over time according to lease terms and the current market. However, this will always be communicated to you in advance by your office provider.
• Limited Control Over the Office Space
Whilst most office providers allow you to customise the interior of your office, modifications such as accessible corridors or wall partitions, will need to be approved by the landlord.
• Potential Relocation
Businesses may have to relocate if the landlord sells the property or decides not to renew their lease.
It is a big decision to decide to purchase a property. The decision should be based on your business’ finances and potential growth. Buying office space may be more suited to well-established companies looking for a long-term investment, whilst renting office space is ideal for companies that need flexibility. It is key to analyse the needs of your business before making a decision.
