BUYING a bank branch or high-street shop is not as difficult as you might think. We answer the key questions.

I want to buy commercial property as an investment. What do I do?

Private investors usually buy commercial properties at auctions, which are held nationwide several times a month. Details of dates and the price properties are expected to fetch can be found at propertyauctions.com.

Propex (propex.co.uk) is a new exchange that enables you to buy and sell properties online. Bidders pay nothing for using the service; vendors are charged a set-up fee of £500 and 0.25% of the sale price.

As with Ebay, once a property goes on sale buyers are given a set number of days until the auction’s completion. The deal is not legally binding until contracts are exchanged.

Is it easy to borrow money to help fund the purchase?

Commercial-property mortgages are available from a wide range of lenders, which will typically lend up to 70% of the market value. If you have your eye on a property at auction it is worth trying to arrange funding beforehand. It can always be cancelled if you are unsuccessful.

Once your bid is accepted you may have only 28 days to pay. Some lenders will have trouble turning an application round if you approach them too late.

What about finding a tenant?

Most properties sold to private investors already come with leases, agreed with tenants, of at least 10 years, providing a predictable source of income. And because the tenant is usually responsible for repairs and buildings insurance the deal is largely hassle-free.

Make sure you do your homework on the commercial tenant, however. Find out how likely the company is to struggle if the economy slows down.

Are there any tax breaks?

When you sell property you must pay capital-gains tax on profits of more than £8,800, but some properties qualify for generous tax relief.

If you rent your property to an unquoted firm you get business-assets taper relief on profits. Someone on the higher rate would pay 40% if he or she sold after less than one year, falling to 10% after two years or more.

But properties let to a quoted company do not qualify. They are covered by the less generous non-business assets taper relief. Even after a decade a higher-rate taxpayer would still have to pay 24% on any gain.

Rent is subject to income tax, but mortgage interest payments and capital allowances such as fixtures and fittings can often be deducted.

Commercial property bought and held in a pension is exempt from all tax on income and profits. And you also get tax relief on your contributions. A higher-rate taxpayer who put in £120,000 would get £80,000 back from the government. He or she could borrow another 50% of the fund to purchase a property worth £300,000.

So is traditional buy-to-let dead?

The Royal Institution of Chartered Surveyors said last week that new investment is subdued because yields are low, but existing investors are staying put. Average yields are 3.6% after costs, according to research firm IPD, but mortgage rates are about 5%, so it may be hard to cover your repayments.

House-price growth is also expected to be modest for several years, so you should not expect a quick profit.

If you take the plunge, make sure you can comfortably afford the property and that the rent will easily cover the mortgage.