Is Commercial Property Investment the New Buy-to-let for UK Investors?

commercial property The Brexit referendum sent shock waves throughout the business world. Although many anticipated the necessary changes that needed to take place, very few expected it to have the magnitude of effect it had on the economy and business landscape.

The uncertainty and suspense that surrounded the vote to leave the EU plunged a lot of businessmen into panic.This, coupled with the loss of value of the pound against rival currencies meant many local investors had to dump their stocks.

Property owners are one of the biggest beneficiaries of this situation. With the Brexit vote coming hot on the heels of the housing crisis rocking the UK, landlords have been able to continually increase their rents and boost their rental income more than ever before.

However, with the recent government interventions and heavy tax regulations, property owners are facing one of their most stringent times, including the latest increase in stamp duty. With up to 45% of rental profits chargeable as personal income tax, it is time to explore alternative investment portfolios.

Commercial property investment is not very popular in the UK, and this is understandable given the promise of quick returns offered by residential properties. This makes the prospects look grim for commercial property investments, coupled with their illiquidity, and the problems of getting the right location.However, it is not all gloom and doom as there are some very interesting things to know about commercial property investments.

While the cost of buying it outright is higher, you could invest through alternative channels such as buying into an investment fund, buying property as a company, or acquiring shares in a property company.

With these alternative methods you are covered from having to directly manage your investment, and should the investment fail, you will not incur a lot of debt because the losses will be borne by every shareholder. Also, it offers the opportunity to diversify your portfolio and increase your chances of getting it right.

With residential landlords enduring one of the toughest tax rates, commercial property offers an escape route which many are yet to see because the need to become more tax-efficient is greater now.

As an individual, you could pay up to 45% income tax on your rental income, but buying into a commercial property company can reduce income tax significantly to where you pay only the 20% corporation tax, thereby giving you the chance to reinvest your profit into the business and boost your income stream.

Despite these advantages, the risks involved still detract people from commercial property investment but that may change soon. With the unpredictable market landscape and frequent changes in tax laws, investing in commercial property could be the future of property investment.

The choice of whether to invest in residential or commercial properties is entirely yours to make. However, it is important to get all the necessary details before investing. You can check out this guide for current and prospective landlords to gain more knowledge on what to expect.

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