Commercial v's residential buy-to-let

As returns on traditional residential buy-to-let slide This is Money look at whether investing in commercial property could be the better option.

"The woes besetting landlords over the past year have been well documented, with some claiming that the recent reduction of tax relief has wiped out their buy-to-let profits.

 Anecdotally, mortgage brokers and lenders suggest investors are increasingly interested in commercial buy-to-let as an alternative to traditional residential lets.

This is because rents on office space and other commercial lets tend to be higher, providing a better yield for landlords when pressure mounts on their costs. 

But there are different risks associated with running a property portfolio with commercial tenants - so if you're wondering whether it's a good idea to get into this area as a landlord, here are some things to consider first.

What's the difference between buy-to-let and commercial? 

Buy-to-let traditionally refers to property let by private landlords to residential tenants - it's rented accommodation for people who need somewhere to live. Mortgage finance assesses the value of the property and rental income in relation to mortgage payments. 

Buy-to-let also encompasses what some refer to as 'complex' buy-to-let. This might be anything from a large block of flats with multiple units rented out to different families or houses in multiple occupation (HMOs) which typically house students in separate lockable rooms within a common property. This type of investment usually requires more complicated financing and landlords often invest through a limited company.

Read more.

Source: www.thisismoney.co.uk.