New breed of landlord seems more prepared to adopt different investment strategies
Whether it’s looking for the best return on your hard-earned savings, or putting your money into stocks and shares, spreading your investment - and therefore reducing your risk - is the sensible strategy.
It’s the same when it comes to investing money in property. Following years of regulatory and tax changes, the days of the ‘casual’ landlord with a single let rental to top up their pension pot appears to be a thing of the past, instead replaced by a more professional type of investor with a portfolio of properties.
This new breed of landlord seems more prepared to adopt different investment strategies and explore other property asset classes. Take their growing interest in semi-commercial properties, for example. Interest in semi-commercial has increased in recent years as canny investors look to maximise their rental yields.
If you’re not familiar with semi-commercial properties, or mixed-use properties as they’re also known, they’re simply rental properties that combine residential properties with an element of commercial use. They can include, for example, flats above shops, restaurants or offices; guest houses with accommodation for the owners; public houses with self-contained accommodation; or buildings with both self-contained flats and offices.
In my opinion diversifying into semi-commercial is a smart move. Not only do semi-commercial properties have the potential to earn higher rental yields compared with a standard buy to let, they also avoid the additional 5% Stamp Duty surcharge which is normally levied on investment properties.
Landlords can also mitigate their risk as if they experience problems with one of their properties, the performance of the other properties in their portfolio can help to limit the damage and make up for any rental shortfall. Of course, as with any investment, there are things which landlords need to take into careful consideration before making the move into semi-commercial. The initial outlay and running costs can be higher compared to a standard buy to let, and a vacant commercial space will still incur business rates.
Another problem landlords may encounter is finding a mortgage with a lender experienced in dealing with semi-commercial cases and who’s able to provide the support they need. Semi-commercial can be complex as they fall into the middle ground between commercial and residential borrowing.
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This article was created in partnership with OSB Group.
