Landlords buying semi-commercial property to lower stamp duty bill

Survey finds mixed use property giving better returns


In April an extra 3% stamp duty was added to purchases of second residential properties hitting investors and landlords however this extra tax did not apply to semi-commercial properties.

Research published earlier this week by Mortgages for Business, a broker, showed that a fifth of investors were now considering semi-commercial property – a figure that has more than doubled since November last year.

David Whittaker, the broker’s managing director, said: “With higher yields it is no surprise that there has been a sizeable shift towards the more complex property types.

“The interest in commercial and semi-commercial property may also have grown because these asset classes do not incur the stamp duty surcharge imposed on residential property.”

While straightforward commercial property might present an intimidating prospect for the casual investor, semi-commercial investments, such as a shop with a flat above, or a pub that has been converted into a shop and flats, represent a good middle ground, said Shaun Church, a director of Private Finance, another broker.

“The flat above the shop is the best approach for an amateur. Depending on the type of tenant in the shop, it’s a nice halfway house between commercial and residential investment,” he said.

“You’ve got two different types of property, so it’s an easy way for someone to diversify and reduce their risk – and stamp duty on commercial property is now looking quite attractive.”

Written by: Houseladder