You are here:Home/News/Commercial vs. Residential- Buy-to-let investment.
Commercial vs. Residential
Commercial property investments are at a record high in comparison to previous rates. Possibly due to the government measures on the residential buy-to-let market.
The government introduced a series of measures to cool down the markets growth rate. In response, the rates of investment into residential buy-to-let properties fell dramatically by 42% in the last 12 months.
With 3% stamp duty penalty, tightening of BTL lending, and restricting tax set against mortgage interest – potential investors are searching other ways around the property market.
The yields in the commercial property market are usually between 6% and 10%. In comparison, within the residential market they’re usually 5% to 6%, meaning that it can be more profitable.
Furthermore, leases on these properties are often longer, providing a guaranteed income over a set period. Whereas, in residential markets a long tenancy would be 12 months (commercial can be 15 years or more) with rent paid monthly, rather than quarterly. Quarterly payments would aid cash-flow significantly for investors and thus more beneficial.
Don’t be put off by the perceived complexity of the investment, as the same advice is applied to residential too – an expert opinion is always crucial for your investments.
Is now the right time to start your property investment? Contact acorn.finance to get started today!
Contact acorn.finance now to get your funding sorted.