Ask a Welsh business owner why they rent rather than own, and the answer is rarely a considered one. The lease came with the business, it renews on schedule, and nobody has sat down with the numbers.
Rents in Cardiff, Swansea and the market towns along the M4 corridor have moved enough over the past five years that the comparison is worth making properly. For a firm with a stable trading record and a deposit, buying the unit can cost less each month than renting it.
The Comparison Most Firms Never Run
Take a workshop or retail unit valued at £400,000, currently let at £34,000 a year. A commercial mortgage at 70% loan to value on a 20-year term at 6% costs roughly £2,000 a month in capital and interest. The rent costs about £2,830 a month and buys nothing.
The gap is not the whole story. The buyer needs £120,000 for the deposit plus fees, carries the repair obligations that a landlord might have shouldered, and takes the risk on the property’s value. Those are real. So is the fact that after 20 years one business owns a £400,000 asset and the other has a rent review letter.
Firms with the deposit and the trading history should at least know which side of that line they sit on.
What Lenders Look At
Commercial mortgages split into two categories that are assessed quite differently.
An owner-occupier mortgage, where the business trades from the property, is judged on the business itself. Lenders want two to three years of accounts showing the company can service the debt from trading profit. An investment mortgage, where the property is let to someone else, is judged on the rent, with lenders typically wanting income to cover 120% to 150% of the mortgage payment.
ABC Finance, an FCA-regulated broker arranging business and property finance across the UK since 2000, publishes indicative pricing for both. As a whole-of-market commercial mortgage broker it lists owner-occupier fixed rates in the 5.5% to 7.5% range as at April 2026, with investment fixes slightly higher at 5.8% to 7.8%. Loan to value usually runs 60% to 75%, reaching 80% in exceptional cases, with arrangement fees of 1% to 2% and terms from three to 25 years.
Credit-backed terms come back in 24 to 48 hours. Full completion takes four to eight weeks, which is worth knowing before you commit to a vendor’s timetable.
The Welsh Angle
Two things make the calculation slightly different here.
Land Transaction Tax replaced stamp duty in Wales, and the rates and bands differ from those in England. On a commercial purchase the difference is not trivial and should go into the model rather than being assumed away.
Second, the funding options here include some that do not exist elsewhere. The Development Bank of Wales lends to Welsh businesses on terms a mainstream lender may not match, and property purchase sits within its remit. A firm going straight to a high street bank without checking what is available locally may be leaving money on the table.
Regional grant support tied to specific areas can also apply to premises. It is worth an hour with your local authority’s business team before the mortgage application goes in, because most of these schemes will not fund a purchase retrospectively.
Where It Goes Wrong
The commonest mistake is buying more space than the business needs on the assumption it will grow into it. Empty square footage still carries rates, heating and maintenance, and a business that stalls for two years finds itself paying for a plan that has not happened yet.
The second is underestimating the deposit. At 70% loan to value on a £400,000 building the deposit is £120,000, and legal fees, valuation, arrangement fee and Land Transaction Tax push the real cash requirement well beyond that. Firms budget for the deposit and get surprised by the rest.
The third is the personal guarantee. Most commercial mortgages to smaller limited companies come with one attached. Directors sign it as a formality and only later work out what it means. Take independent advice on the wording, particularly on whether it is capped and whether it survives a sale of the business.
Worth Asking This Year
If your lease has three years or fewer left to run, the question is live now rather than at renewal. Purchase timelines of four to eight weeks assume a straightforward case, and finding a suitable building takes considerably longer than arranging the finance on it.
Start with your last three years of accounts and an honest view of the deposit you could raise without straining working capital. If those two numbers work, the rest is a search problem.