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Why buy?

Reviewed by Peter Tobin March 2015

Purchasing a property is a huge commitment of time, money and resources for any organisation.  This section is designed to help you decide if purchasing a property is the right decision for your organisation at this time.

So why buy?

If you are considering buying a property for the first time, it is likely that your organisation is currently renting the premises it occupies. Buying can offer numerous benefits over renting, however there are also potential disadvantages that must be considered during the decision-making process.

The following table outlines some of the advantages and disadvantages of buying over renting.

Advantages

Disadvantages

Mortgage repayments may be similar to a rental payment on the same property

Unlike renting, you'll need to come up with a substantial deposit - this is money that might otherwise be used for your direct charitable activities

You will not be exposed to any sudden rent increases and, with a fixed rate mortgage, your monthly repayments will be predictable

  You can be affected by interest rate rises and dips in the property market.

You may be able to sublet any free space creating extra income

 Less flexibility - getting out of a rental agreement is generally an easier task than selling premises or finding a new tenant to take them over.

Interest payments on a commercial mortgage are tax-deductible and any gain in value of the property will increase your capital

Owning a property means you'll be responsible for all maintenance, fixtures and fittings, insurance, decoration and security – and the associated costs

As your organisation grows or changes you may be able to extend your existing premises, or make internal changes to adapt the premises to your needs.

 
Any loss on the value of the property will decrease your capital.