The website ResidentialLandlord.com reported in March 2017 that over the six-month period from October 2016 to March 2017, one commercial mortgage lender had seen a 50% increase in the number of enquiries about semi-commercial property.
These properties are not subject to the 3% extra stamp duty on resident properties last year, and will not be affected by the tax increases on buy-to-let property that launches this Saturday, April 1.
Semi-commercial properties have mixed residential and commercial use. They include shops with flats above them, pubs with accommodation, and workshops that have residential accommodation attached. Many landlords are investing in these properties for the first time and are attracted by the tax advantages of owning commercial property over residential rented property.
An example of the savings that can be made in stamp duty is buying property worth £500,000, which, if residential, only costs £30,000 in stamp duty. A semi-commercial property of the same value would cost £14,000 in stamp duty, resulting in saving £16,000.
Another reason for investing in retail premises is that tenants tend to stay longer. Many landlords are also taking out bridging loans to convert shops so that there is a separate entrance to the accommodation.
Due to changing rules and increased costs, landlords are looking at ways to diversify their property portfolios so that they have more strings to their bows than buy-to-let properties alone. Increasingly, they are looking to invest in commercial and semi-commercial properties