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Experienced landlords are looking into alternative means of making money, and with the government seemingly determined to dampen down enthusiasm for the buy to let sector, investors are turning away from residential property.
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In less than three months’ time, landlords with mortgaged properties will be penalised by a reduction in the amount of mortgage interest tax relief they can claim against property income. Many professional landlords could end up making a loss on their portfolios.
Beat the Tax Changes
Some experts have advised that the best way to beat the tax changes is to move your portfolio into a Limited Company, but many landlords are concerned that it won’t be long before the government subjects limited companies to a stricter tax regime. However, there is another solution.
Investing in Commercial Property
A large number of investors are switching to commercial properties such as shops and offices instead. One commercial auctioneer has seen a three-fold increase in the number of landlords diversifying into commercial property. Buying a commercial property is relatively simple and rental yields are higher. There is also the added advantage of the fact that most tenants take on costs such as business rates, repairs and insurance.
Shops, including restaurants and cafes, are always popular, but it’s worth considering small factories and offices. If you buy a property with an existing tenant in place, make sure the business is thriving and the tenants are people you can deal with. Remember, it will find be harder to secure a mortgage if the property is vacant.
