An increasing number of landlords are diversifying away from residential property and investing in property types that have a more favourable tax situation, such as retail units and small commercial developments, master broker Clever Lending has claimed.
Clever report that many property investors are moving away from traditional buy-to-let property purchasers and choosing instead to acquire commercial units, mainly to avoid having to pay the 3% stamp duty surcharge that was introduced on 1 April.
The fact that permitted development rights have been made permanent and that rates on business and retail units have been relaxed, have also helped to entice more property investors to consider buying commercial units.
Sonny Gosai, sales and operations manager at Clever Lending, pointed out that the tax reforms for commercial property have put a focus on small to medium sized investment opportunities.
With a 0% band up to £150,000 and just 2% above this to £250,000, residential landlords are now applying to finance this type of investment as an alternative way to grow their existing property portfolio.
Gosai said: “The Chancellor’s increases on buy-to-let taxation and the relaxation of tax on other property types has resulted in a shift of focus for the entrepreneurial landlord. Becoming a commercial landlord has some distinct advantages over the residential sector and it may not be that big a step if the property is a mix of retail and residential. Industrial and office units can also be acquired to grow a portfolio on terms that may be more beneficial with higher income and asset value.
“We’re still seeing the post-budget market evolve but the trends are starting to appear and it’s an exciting time in commercial bridging finance.”