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| 29.05.08 SMES DEFY CREDIT CRUNCH, CLAIMS DEVELOPER Small business owners across Yorkshire are defying credit crunch uncertainties and buying their own premises, acccording to a property developer.Business Homes has reported continuing demand from businesses looking to buy their own premises, despite the recent softening of the commercial property market. Businesses looking to buy are taking a medium to long- term view and most are acquiring the properties via the traditional route of commercial mortgages, the Leeds- based company claims. However, many others are buying offices as a long term investment by placing them into the property element of a Self Invested Personal Pension Scheme (SIPP), according to Business Homes. James Houlston, managing director of Business Homes, said the trend has led to strong demand across the developer's business parks in Leeds, Knaresborough and Doncaster. Mr Houlston said "We are experiencing high demand across the region from people wanting to buy property, including those looking to purchase office space at Turnberry Park, Leeds, which is due to reach practical completion next month. "Many small business owners are seeing their premises as a good investment and a way to progress expansion plans for their business." Independent research commissioned by Business Homes suggests that in mortgage terms alone, the savings on purchase could slash the effective cost of a £3,000 sq ft office from £17 per sq ft a year, to just £10.35 per sq ft, with an interest-only loan. The savings on a similar- sized office for a capital and interest mortgage would bring the effective annual rental down to £13.05 per sq ft, the research said. Both calculations assume that the buyer puts down a deposit of 20%, and takes out a 25- year loan, based on an interest rate of 7%, 2% above the Bank of England base rate. Stephanie Trigg, an independant commercial mortgage advisor who assists Business Homes' customers, said: "In my experience the credit crunch has not reduced the availability of commercial mortgages like it has in the residential market. "On the contrary, they are currently widely available from numerous banks and lenders. Lenders on good quality commercial properties are lending up to 80% of the value, subject to status of the purchaser." Mr Houlston expects the tend towards purchase to accelerate, once the current economic malaise is over. He added: "We had wondered which way the market would move if the economic uncertainty continued, but it is already clear that more and more owner-managers are considering the merit of outright ownership." |
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