How to choose your first business premises

Understand your business needs and budget 

Before choosing a premises, assess your operational needs, customer base, and realistic budget. 

The size, layout and facilities required will depend on the type of business you run and what you want the property for. Examples include: 

• Offices: Factor in the size of your workforce and space required. Will everyone always be in the office or will staff sometimes be working remotely? You need to consider space for desks, social and collaboration zones and meeting rooms.  
• Retail: Consider the size of space required for your optimum number of customers. Will you require customer facilities such as seating and toilets? 

Budgeting effectively for your first office, shop or other type of property is vital. Create a budget that factors in all your business premises costs including rent, utilities, insurance and maintenance. Factors to consider include: 

• Fully understand your rent, what’s included and when it might be reviewed.  
• If your business is required to pay business rates, understand the amount. Changes such as the 2026 business rates revaluation in England and Wales could impact costs.  
• Understand your costs for energy bills and consider how they may increase.  
• You may need to pay buildings insurance. For public and employer’s liability insurance, premiums may be high for certain types of businesses such as retailers with high footfall or industrial buildings with heavy machinery.  
• Is your premises already furnished or will you need to buy furniture, shop fittings, equipment etc?  
• If you are responsible for maintenance of the building, consider what day-to-day and unexpected costs may be involved.  

A cash flow forecast is crucial for your budget. It shows how cash is expected to flow in and out of your business and helps you identify shortages and how much investment your business may need to cover costs. Read tips for cash flow forecasting here. 

Location, accessibility, and local regulations

The location of your property can affect issues including cost, visibility, footfall, logistics and regulatory compliance. 

The best location for your business depends on your needs. For example:  

• Urban locations give access to a large customer base, a range of talent for recruitment purposes, faster broadband and services such as banks. Relevant businesses include retail, hospitality, professional services and creative agencies.    
• Rural locations typically offer lower purchase and lease rates, less competition and a perceived better quality of life. Relevant businesses include niche manufacturers, agricultural businesses and those looking to establish a local, community-focused customer base. 
• Industrial locations provide properties designed for specific operational needs such as warehouses, manufacturing and R&D facilities. 

Other factors you should consider when deciding on a location include transport links, parking and delivery access. 

When deciding on a property you need to be aware of the use class. This determines what a property can be used for without needing a full planning application for a change of use. There might be other local planning rules you need to understand too. Contact your local authority for full details. 

Lease or buy? Understanding your options

Deciding whether to lease or buy a premises depends on your business type, cashflow, and growth plans. 

Buying and leasing a property have several pros and cons: 

Pros of buying: 

• The property is an appreciating asset on the company’s balance sheet.  
• Mortgage payments are often fixed for long periods which provides more predictable outgoings than rent which can be subject to unpredictable rent reviews. 
• You have full control over the property for alterations and renovations.
• Tax advantages include offsetting mortgage interest rates against taxable profits and business asset rollover relief if you sell the property and buy another one.

Cons of buying: 

• A substantial upfront investment is required.
• The value of the property can fall which puts your business at risk of negative equity.  
• You are responsible for the cost of all maintenance and repairs.
• If you fail to meet your mortgage payments, the property could be repossessed.  

Pros of leasing: 

• Usually requires a much lower upfront investment. 
• You can usually move in more quickly because negotiating a lease is typically less complex than arranging a mortgage.
• More flexibility to relocate, upsize or downsize when the lease period ends or via a break clause.
• Serviced offices and co-working spaces typically include services such as broadband, refreshments and access to meeting rooms.  

 Cons of leasing: 

• Rent payments provide no long-term asset value for the business. 
• Limited control over the premises, with changes usually needing the landlord’s permission. 
• Rent is typically reviewed regularly and almost always increased.
• There can be hidden costs such as deposits and service charges.  

When buying or leasing a property, it is highly recommended that you get legal and financial advice before signing agreements. 

Tax and accounting considerations 

Your choice of premises can have tax implications for allowable expenses and business rates. 

You can claim tax relief on some business expenses. To qualify, they must be wholly and exclusively for purposes of the trade. Property-related expenses include rent, utilities and building repairs. For limited companies, mortgage interest is fully deductible (but only subject to a 20% tax credit, equal to the basic rate of income tax for sole traders). 

Read our guides to allowable expenses for sole traders, limited companies and landlords. 

Business rates are a property tax imposed on non-domestic properties. 

There are various business rates relief schemes which provide a reduction in business rates for some businesses throughout the UK. Examples include: 

• England: Small business rates relief for properties with a rateable value less than £15,000. 
• Wales: Small business rates relief for properties with a rateable value less than £12,000. 
• Scotland: Small business bonus scheme for properties with a rateable value up to £20,000 for those with one property and up to a combined £35,000 for those with more than one property. 
• Northern Ireland: Small business rates relief for properties with a rateable value of less than £15,000. 

In the 2025 Budget, the Government announced changes to business rates in England, including supporting small business relief for certain businesses.  

If you purchase, construct or renovate a building for your business, you may be able to claim tax relief through capital allowances.  

Your local council might be able to provide a grant to help you cover the costs of a new property. For example, Bristol Council provides funding for businesses that take on vacant properties in certain areas of the city. Contact your local council to check what’s available.  

There are various funding schemes for improving energy efficiency within properties, such as the Boiler Upgrade Scheme which provides a grant to cover part of the cost of replacing fossil fuel heating systems with a heat pump or biomass boiler. 

Read our guide to finding and applying for grants here. 

There are several enterprise zones and areas which provide incentives such as business rate discounts and enhanced capital allowances for machinery and equipment purchases 

Planning for growth and flexibility

When selecting premises, choose a space that supports your long-term plans. 

Consider how your business might scale and whether the premises has room for changes such as more staff or storage requirements. 

You may want to negotiate a break clause or flexible lease terms that allow you to move premises quickly if you need to expand or downsize. 

Many businesses have a hybrid or remote working policy which means staff sometimes work from home or elsewhere. Consider how that impacts the premises you select. You may opt for a small central headquarters and give staff access to co-working and hot desking in other spaces.  

It’s recommended that you review your business premises strategy annually and make any adjustments.  

How TaxAssist Accountants can help 

TaxAssist Accountants help business owners make financially sound decisions when choosing their first premises. Contact us on 0203 827 6000 for a free, no obligation consultation and a fixed fee quote or use our online contact form.  

Last updated 31 Dec 2025 | First published 31 Dec 2025

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This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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