The number of buy-to-let landlords turning their hand to commercial property investment has tripled in the last three years.
With residential landlords having been hit by a number of buy-to-let changes in recent times, many investors are looking to boost their portfolios with a foray into the commercial property market.
Essentially, buy-to-let changes are what have caused the switch. With many of these changes coming into full force by April 2017, landlords are making their move now.
However, investors have been hit with a number of changes already, and confidence among buy-to-let landlords remains high.
Meanwhile, with many of the tough tax changes yet to apply to commercial lettings, savvy landlords have sensed an opportunity to make some extra money.
Indeed, George Walker, commercial auction partner at property auctioneers Allsop said: “We’re getting a lot of investors into our market because of the changes to buy-to-let. Once they have bought one, they can’t believe the simplicity and want to do it again.”
Purchasing property through a limited company
Last year, more than 100,000 landlords bought properties through limited companies, with lending to limited companies accounting for 30 per cent of all buy-to-let purchases in the first half of the year.
Experts predict that buy-to-let mortgages through limited companies are set to surge in 2017, as landlords look to avoid heavy taxes and mortgage lending changes.
However, should the government look to clamp down on this growing trends, residential investors may follow suit and turn their attention to the commercial market.
What to keep in mind if you’re considering commercial property investment
Buy-to-let landlords considering investing in commercial property should, however, do their research.
Residential landlords’ responsibilities differ from those of a commercial landlord, and knowing the differences is crucial to make sure you stay on the right side of the law.
Commercial landlord insurance should also be taken into consideration, as there will be differences in policy wording, endorsements and cost to that of a residential landlord insurance policy.
The market itself also differs, and so should an investor’s expectations – rental yield is often a much bigger factor in commercial investment, while capital growth is often front of mind for many residential landlords.