Commercial vs. Residential

Buy-to-let investments.

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!