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!