Many buy to let landlords are looking to diversify their property portfolio by investing in different property types. Specialist brokers are the key to guiding them in the market.
Many landlords hit by tax rises and extra stamp duty have seen the profitability of their businesses decrease. To address this, many are looking at commercial property as rental yields and capital growth are high.
OneSavings Bank’s study of brokers discovered that 51% of them had been approached by landlords about commercial mortgages to diversify their property portfolio. Over half of these enquiries were about loans for houses of multiple occupancy (HMO), 14% were concerning commercial property, and 9% were looking at mixed use or semi-commercial property.
Darrell Walker of OneSavings bank said:
“We are seeing a snowball effect at the moment as both brokers and landlords become more savvy about these opportunities and the market builds some real momentum.”
He added that landlords should be careful when diversifying and the seek professional advice that specialist brokers provide.
Though there are some similarities with running a buy to let business, owning commercial property has differences. Landlords can save on the 3% stamp duty, and tax is calculated differently than buy to let residential property, but lease terms and conditions will be dissimilar to residential ones.
The biggest challenge is identifying the best properties to buy that have tenants available who can pay high rents.
A commercial mortgage broker can help and advice landlords, then source suitable commercial mortgage for property purchases.