Commercial Property Deal Structures

There is more than one way to buy or fund commercial property. The structure affects your risk, return and tax, so it is worth knowing the options.

Common structures

• Straight purchase: buy the freehold or a long lease, tenanted or vacant.
• Sale and leaseback: buy from an occupier who then leases it back on a long lease, giving you an instant tenant. See sale and leaseback.
• Forward funding: fund a development in return for the completed, let investment, sharing development risk for a better yield.
• Auction: buy quickly and often below market, but with limited due diligence time and immediate commitment.
• Joint venture: partner with others to share capital, risk and expertise.

Tenanted vs vacant

Buying tenanted gives immediate income and, where the conditions are met, can be VAT-free as a TOGC. Buying vacant means no income until let, plus empty rates, but more control and often a lower price.

Match the structure to the goal

Income investors favour well-let tenanted assets and sale-and-leasebacks. Those chasing higher returns take on development or vacant-to-let risk. For indirect, listed exposure without owning buildings directly, see REITs. Each structure has its own tax and finance angle, so take advice before committing.

What are the main ways to buy commercial property?

A straight purchase, sale and leaseback, forward funding, auction, or a joint venture, each with a different risk, return and tax angle.

Is it better to buy tenanted or vacant?

Tenanted gives immediate income and can be VAT-free as a TOGC; vacant means no income and empty rates, but more control and often a lower price.