Why Buy Commercial Investment Property?

Long Term Tenants Guaranteed

The income derived from commercial property is relatively secure as the properties are let on long term contracts. These contracts are typically between 3 to 5 years with upward rental reviews every 3 years, which ensures rental yields are kept high relative to current capital values. The key advantage of long-term contracts is that void periods are kept to an absolute minimum. This leads to….

Secure Growth

Whereas the residential market is influenced by interest rate changes and people’s ability to borrow, the commercial sector is not influenced to the same extent by rate changes.

The commercial sector is more aligned to the activities of companies (potential tenants) and their ability to keep up payments.

Higher Returns Achievable

In recent years, investment in commercial property has offered relatively high income for investors compared to investment in residential property. Yields of 6 – 15% are commonly available through investment in commercial property – rental yields which are becoming harder to come by with residential property in recent years.

Investors who have recognised the benefits of residential buy-to-let are now beginning to realise that commercial properties such as offices and shops offer greater returns and a high income. Over the last 10 years in the UK commercial property has been among the best performing asset classes – outweighing returns from gilts and equities by a significant margin.

Tax Breaks

You can sell commercial property at any time, either vacant or with tenants in place. If you own commercial property for more than two years and rent it out to a business, it qualifies for full business asset taper relief meaning that 75% of any capital gain is not taxable. Certain commercial deals (such as this one) are also pension and SIPP friendly.

Diversification

Whether you have invested in residential property, the stock market or another asset form, commercial property is the perfect way to diversify an investment portfolio. This is because it is not affected directly by any of the same factors that other assets classes are.

Well Established Market

The UK commercial property market has a well-established market structure and legal framework which allows for steady growth. The finance market is also beginning to catch up and offer support to the growth of the commercial market. Until recently, most lenders only offered 50% finance to investors looking to invest in commercial property. However solutions now exist where 80% finance is now available to our investors, making the market much more accessible.

Fully hands-off approach to Commercial Investment

As with most commercial units, your tenants will pay for local business rates, service charges, utilities and will be responsible for furnishing the offices themselves. Apart from the minimal paperwork exercises involved in purchasing your unit(s) there will be little else for you to do to manage your office/unit on an ongoing basis.