When talking about 'Buy to Let', most of us think of investing in residential property. Jan Merriott advocates commercial property as a viable option.
Over the last few years we have seen an attack on residential property investment from the government which in our opinion has only acerbated the problem of housing shortage. When will the government learn that discouraging buy-to-let investors simply reduces the letting supply and increases capital values making it even more difficult for people to buy their first home and increasingly expensive to rent as well!
In these conditions, residential investment activity increasingly becomes the domain of the large investor while the new small-scale investor is discouraged by:
With other assaults on buy-to-let investors weakening the landlord’s position it is increasingly a wonder that landlords try to manage their own property. It now requires an expert manager as there are well over pieces of legislation to be aware of in letting residential property in order to avoid the pitfalls that are forever creeping up on the unwary investor.
As a result, we are increasingly seeing investors looking at the benefits of Direct Commercial property investing, and it features much less on the government’s agenda in terms of regulation. Advantages of commercial property investment are:
However, like any investment it is not risk free and higher yields by implication suggest it is riskier. This is due largely to:
However, for a long-term investor who knows his onions commercial property will be part of their investment portfolio to provide diversification of risk.
Although the main sub-sectors are principally confined to retail, industrial and offices there is a range of specialist investment options for those with specialist knowledge, e.g. ground rent investors, development and land speculators, property traders etc.
For those looking for more passive ways of investing in commercial property there are other ways of investing such as buying shares in property companies, or in property investment trusts including Real Estate Investment Trusts set up to provide maximum pension benefits.