Should Your Small Business Buy or Lease Commercial Premises?

Are you tired of paying rent for your business premises and wondering if purchasing your own property is the better option? Deciding whether to lease or buy commercial space is a significant decision for any small business owner. The best choice depends on your financial position, long-term goals, and the needs of your business. Here, we explore the advantages of buying versus leasing business premises to help you make an informed decision.

Advantages of Buying Business Premises

Purchasing commercial property offers a range of benefits, particularly for established small businesses looking for stability and long-term value.

1. Control Over the Property

   • As the property owner, you no longer have to answer to a landlord.

   • You have full authority to make changes to the fit-out and customise the space to suit your business needs.

2. Protection Against Rising Rent

   • Over time, owning your business premises can be more cost-effective than leasing.

   • While rents typically increase over time, your ownership costs may remain stable, providing financial predictability.

3. Long-Term Asset Value

   • If your business relocates or closes, you still own the property, which can be a valuable asset.

   • The building could generate rental income or appreciate in value, contributing to your financial security.

Advantages of Leasing Business Premises

Leasing is often the preferred choice for small businesses that prioritise flexibility or have limited capital for property investment.

1. Flexibility for Changing Needs

   • Leasing allows you to scale up or downsize as your business grows or adapts to new working arrangements.

   • If your location needs change, it’s easier to relocate when you lease.

2. Lower Initial Costs

   • Leasing avoids the high upfront costs of purchasing commercial property, including deposits and legal fees.

   • This frees up cashflow to reinvest in growing your business.

3. No Property Maintenance Expenses

   • Building-related costs, such as insurance, rates, and major repairs, are typically the landlord’s responsibility.

   • You don’t have to worry about unexpected maintenance issues or compliance costs.

4. Reduced Financial Commitment

   • Commercial properties are expensive, and financing a purchase can strain your business’s finances.

   • Leasing offers a lower monthly expense compared to loan servicing, making it a practical option for many businesses.

Key Considerations Before Buying Business Premises

While buying can be a smart long-term strategy, it’s essential to evaluate your readiness:

• Financial Stability: Is your business well-established with consistent cashflow?

• Growth Potential: Will the premises suit your needs in five or ten years?

• Market Research: Are you buying in a location with strong long-term value?

Need Help Deciding? Let’s Run the Numbers

Deciding whether to buy or lease commercial premises isn’t just about preference—it’s a strategic financial decision. A comprehensive cost-benefit analysis can help determine which option aligns best with your business goals.

Get in Touch
At AGS Financial Group, we specialise in helping small businesses make informed decisions. Contact your Relationship Manager or one of our experienced business advisors to explore your options and ensure you’re on the right path for success.