Residential Buy To Let Or Commercial?
17.11.2017
Quintons Commercial Property Agents are seeing increased activity in the commercial investment market since the stamp duty change on purchasers buying a second residential property.
Those of you in the buy to let market will be aware of the additional stamp duty levy if the purchaser already has a residential property. That additional charge is 3% which on a normal buy to let property in the West Berkshire area can be a minimum of £5,000 on even the cheapest of apartments.
In addition, those of you in the higher rate income tax bracket will lose tax relief on some of the mortgage payments. You used to be able to offset all of the interest costs, this has now changed. Mortgage interest relief will gradually reduce between 2017 and 2020 to 20%.
An example would be a landlord with rental income of £10,000 and £9,000 of mortgage interest. Tax will be paid on the full amount, less a 20% credit on the mortgage interest. The tax bill for a higher rate taxpayer would therefore work out at £4,000 (40% of £10,000 profit) minus £1,800 (20% of £9,000 interest), which equals £2,200, up from £400 under the previous tax regime. That’s an increase of £1,800.
Commercial investments were previously overlooked but since the two tax changes more and more investors are looking at this side of the market place.
Depending upon budget and risk profile Quintons are offering a number of ready-made investments or for the riskier investor purchasing a vacant property and then letting can create an investment with great returns.
The typical residential buy to let investment may yield a maximum of 5%, a commercial investment is generally much better yielding up to 10%, more if you create your own.
Current investment instructions include a freehold retail investment in Marlborough. The property comprises ground floor retail and basement set within a three storey terraced building currently let to Costa Coffee Limited, for 15 years from 8th November 2005.
Quintons are marketing 20, 21 & 21a Charnham Street, Hungerford that comprises a large ground floor shop with large 3 bedroom maisonette above. The property produces an income of £27,000 per annum at the moment with an outstanding rent review. Offers are sought in the region of £450,000.
Further investment property includes 59 High Street, Barnstaple, EX31 1JB. The property comprises a mid-terrace Building which is arranged in the main over ground and first floors. There is an additional second floor space to the front of the property. The upper floors could be developed on lease expiry subject to the necessary consents. The property is leased to Sports Direct at a rent of £65,000 per annum. Guide price is £690,000.
Quintons are marketing some smaller units closer to home in Hambridge Road, Newbury. The units are retail and are let on leases of 9 years each. Prices should start at offers in excess of £130,000 for a property with a rent of £12,878 per annum (9.9% return).
For full details or further information on any of our commercial properties available for sale or to let please contact Shane Prater on 01635 551441.
Those of you in the buy to let market will be aware of the additional stamp duty levy if the purchaser already has a residential property. That additional charge is 3% which on a normal buy to let property in the West Berkshire area can be a minimum of £5,000 on even the cheapest of apartments.
In addition, those of you in the higher rate income tax bracket will lose tax relief on some of the mortgage payments. You used to be able to offset all of the interest costs, this has now changed. Mortgage interest relief will gradually reduce between 2017 and 2020 to 20%.
An example would be a landlord with rental income of £10,000 and £9,000 of mortgage interest. Tax will be paid on the full amount, less a 20% credit on the mortgage interest. The tax bill for a higher rate taxpayer would therefore work out at £4,000 (40% of £10,000 profit) minus £1,800 (20% of £9,000 interest), which equals £2,200, up from £400 under the previous tax regime. That’s an increase of £1,800.
Commercial investments were previously overlooked but since the two tax changes more and more investors are looking at this side of the market place.
Depending upon budget and risk profile Quintons are offering a number of ready-made investments or for the riskier investor purchasing a vacant property and then letting can create an investment with great returns.
The typical residential buy to let investment may yield a maximum of 5%, a commercial investment is generally much better yielding up to 10%, more if you create your own.
Current investment instructions include a freehold retail investment in Marlborough. The property comprises ground floor retail and basement set within a three storey terraced building currently let to Costa Coffee Limited, for 15 years from 8th November 2005.
Quintons are marketing 20, 21 & 21a Charnham Street, Hungerford that comprises a large ground floor shop with large 3 bedroom maisonette above. The property produces an income of £27,000 per annum at the moment with an outstanding rent review. Offers are sought in the region of £450,000.
Further investment property includes 59 High Street, Barnstaple, EX31 1JB. The property comprises a mid-terrace Building which is arranged in the main over ground and first floors. There is an additional second floor space to the front of the property. The upper floors could be developed on lease expiry subject to the necessary consents. The property is leased to Sports Direct at a rent of £65,000 per annum. Guide price is £690,000.
Quintons are marketing some smaller units closer to home in Hambridge Road, Newbury. The units are retail and are let on leases of 9 years each. Prices should start at offers in excess of £130,000 for a property with a rent of £12,878 per annum (9.9% return).
For full details or further information on any of our commercial properties available for sale or to let please contact Shane Prater on 01635 551441.