If you own a commercial leisure property that is underperforming or that you no longer want or need, as a landlord, usually the most obvious option is to sell it.
As an owner-occupier, it’s also worth exploring whether you can sell the property as part of an established business. Buyers are often willing to pay a premium for a fully operational business with existing clients, staff and goodwill, rather than taking on an empty property that requires investment and setup.
As a landlord, you may be able to sell the property as a tenanted investment, which can increase your return, or as vacant possession if it’s empty. When selling commercial leisure property, it’s beneficial to understand the various costs involved and the size of any tax bill. That will give you a clearer picture of the likely return so you can plan for the future.
Getting professional advice early in the process will help you complete the sale efficiently, minimise your tax exposure and avoid delays.
When should I sell my commercial leisure property?
Before discussing the likely leisure property sale fees, it’s worth considering the timing of your sale and the impact it may have on your return.
Commercial property agents with specific experience in your industry sector and location will have up-to-date knowledge of local market conditions, recent comparable sales and current buyer demand for leisure assets like yours.
They’ll be able to advise you whether it’s better to sell now or wait for a more favourable market, and help you position the property to attract the right buyer, whether that’s an investor, developer or an operator looking to expand.
They will also assess the property’s strengths and identify any improvements you could make to enhance its appeal before you sell.
What leisure property sale fees will apply?
The exact costs of selling a commercial leisure property will vary depending on factors such as the property's value, the complexity of the transaction and the level of capital appreciation. However, as a rough guide, these are the fees you can expect to pay.
Commercial agent fees
Selling a commercial property, such as a gym, health club, sports centre or entertainment facility, can be complex. There is a limited number of buyers for that type of property, so it pays to work with someone with specific experience in the leisure sector who understands the market and can target prospective buyers effectively.
Commercial property agents can assist with every aspect of the transaction, from helping you prepare the property and valuing and marketing it on your behalf, to arranging viewings, negotiating the best deal and managing the sale to completion.
Typical cost: 1% to 3% of the overall sale price, although you may be able to negotiate a fixed fee for lower-value properties.
Legal fees
You will need to appoint a commercial conveyancer or solicitor to handle the legal aspects of the sale. They will manage enquiries from the buyer’s solicitor, prepare the sale contract, deal with the title deeds and transfer any lease or licensing arrangements. You must pay them a fee for their work and cover expenses such as search and Land Registry fees.
Typical cost: The fee will vary based on the property's value and the complexity of the sale (for example, whether it has existing tenants or multiple assets), and can be a flat fee or a percentage of the sale price. As a rough guide, you can expect to pay:
- £1,500 to £3,000 for properties under £500,000
- £3,000 to £5,000 for properties between £500,000 to £1 million
- 0.5% to 1% of the sale price for properties over that amount
Energy Performance Certificate (EPC)
High energy use in gyms, swimming pools and other leisure facilities makes an up-to-date Energy Performance Certificate an essential part of the sale. It gives prospective buyers a snapshot of the building’s energy efficiency and potential running costs, which are key considerations for modern operators and investors.
If the EPC rating is lower than expected, it may be worth making some improvements before marketing the property. Upgrading lighting systems, improving insulation or installing energy-efficient heating and ventilation can enhance the EPC rating and the property’s marketability.
Typical cost: You can expect to pay £200 to £400 for an EPC for a smaller premises (150 to 500m2), rising to £1,000 or more for larger, more complex buildings.
Property clearance and maintenance fees
When you’re preparing to sell a commercial leisure property, you’ll have to pay to clear any assets or equipment that are not included in the sale. You may also have to make repairs and perform essential maintenance to enhance the property’s appeal to prospective buyers.
Typical cost: You can expect to pay between £1,000 and £5,000, depending on the assets and equipment to clear and the property’s condition.
Mortgage redemption costs
If you have a commercial mortgage or secured loan on the property, there are likely to be fees associated with redeeming or transferring the mortgage. You should check your loan agreement carefully, as lenders can also apply early repayment charges and penalties that add thousands to the cost of the sale. These charges may be so significant that they can affect the timing of your sale.
Typical cost: These often-overlooked leisure property sale fees can range from 1% to 5% of the outstanding loan amount, depending on how much time remains on your deal.
Capital Gains Tax (CGT)
Leisure property Capital Gains Tax is payable on the profit (the difference between the purchase price and sale price) you make when selling the premises. The amount you pay will depend on factors such as how long you’ve owned the property, whether it’s held personally or through a company, and whether any reliefs or exemptions apply.
Typical cost: For the current tax year, basic-rate taxpayers pay 18% CGT on their profit when selling a commercial property. That rises to 24% for higher- and advanced-rate taxpayers. However, you receive a tax-free allowance of £3,000, and you may be eligible for Business Asset Disposal Relief, which reduces the CGT rate you pay.
VAT
Most commercial property sales in the UK are exempt from VAT. However, VAT is charged if the property is less than 3 years old or if the seller has opted to tax it by waiving the VAT exemption.
Typical cost: VAT is charged at the standard rate of 20% on the property’s sale price. However, in most cases, this isn’t a direct cost for the seller. Instead, you add VAT to the agreed sale price and pay it to HMRC. The buyer can then usually reclaim the VAT if they’re VAT-registered and intend to use the property for taxable business activities.
Maximise the value of your leisure property sale with Eddisons
When it’s time to sell your leisure property, our commercial property agents combine deep sector knowledge with an extensive network of active buyers to deliver a smooth, successful sale.
We will guide you seamlessly through every stage of the process - from valuation and marketing to negotiation and completion - to maximise your return and minimise your costs. Find out more about our leisure property services and get in touch to discuss your sale or receive a tailored quotation.
