Most of us can reel off the names of a score or more major retailers and many of us assume that these household name companies form the bulk of our retailers. But, of course, small individual businesses account for the major share of shop owners and the turnover in this type of retail operation is very substantial.
This kind of retail premises are bought and sold as going concerns, usually through small advertisements in the various retail trade magazines, though increasingly specialist business agents are being given the task of selling them and it is mighty big business.
These agents, and in fact anyone buying a retail business, can raise the finance by way of a mortgage from any of 80 or so specialist lenders who range from building societies to finance houses, insurance companies and banks.
Competition is fierce and very attractive rates can be obtained by shopping around. Professional advisers are using, in growing numbers, the services of Blay’s Guides, which publishes monthly commercial mortgage tables showing at what rates and on what type of properties lenders are willing to advance cash by way of mortgages.
The tables are divided into various categories including offices, shops, professional practices, investment properties, both residential and commercial, and factories and warehouses.
In the tables for September, Blay’s points out that the sudden 1% increase in bank base rates earlier this month and the consequent raising of its commercial mortgage lending rates to 12.25% or more has lost the banks, at least temporarily, their competitive edge.
The Halifax Building Society has had to increase its rate to 13.25% and the Peckham Society has pulled out of the market for the time being owing to a shortage of funds.
These are an indication, says Blay’s, of the difficulty that many societies have in attracting sufficient money from savers.
Crusader Insurance is in the tables for the first time, willing to lend £100,000 or more at a fixed rate of 11%. According to the tables, insurance companies and some of the smaller building societies are now offering the keenest rates to commercial borrowers.
These include Commercial Union and Eagle Star — the latter tends to favour lending on shops with accommodation — and Mercantile Building Society will lend on shops with accommodation above at 11.25%, although its mortgages are limited to 66% of the value of the property.
The keen rates offered by some of the companies in the tables indicate that it is still possible for independent retailers and investors to borrow at rates which enable them to service the debt adequately, either out of trading income or, in the case of investors, from rental income.
