Commercial Property
Investing In Commercial Property Made Easy With Assetz for Investors
Commercial Property Investment - Why you should investigate further
Traditionally, investing in commercial property has been generally limited to professionals, institutions and a number of 'in the know' private investors.
But you don't need to be a property professional to appreciate the significant benefits of investing in commercial property. Individuals who have seen the benefits of residential property investments in houses and flats, which can be rented out, are now beginning to realise that commercial properties like shops, offices and workspaces have the ability to provide substantially greater returns and a high income.
In fact commercial property was the best performing asset class for many years, outperforming gilts and equities - gilts by a significant margin.
How you can invest in commercial property through Assetz for Investors :
- Directly off-plan - purchase an entire building yourself and receive a 20% discount - see the examples here - this requires a deposit of around 20-30% and property is available from £300k and upwards - yields of 10% possible and capital gains of 20% following tenanting (or 50% or more return on equity) - this is mainly applicable to rising and buoyant market.
- Directly Tenanted - purchase an entire building yourself with tenant in place and receive yield of around 6% to 10%- see the examples here - a deposit of around 20-30% is typically required and the rent can pay off a repayment mortgage over around 20 years.
Contact Assetz for Investors for more details of these schemes or register your interest below by logging your interest via the small form here.
Reasons to invest in commercial property :
- Relatively high income compared to residential - 6.5 - 15% - the better the client the lower the rental yield
- Steady growth in value for most commercial property
- Well-established UK property market structure and legal framework
- Tenants accept full repairing and insuring (FRI) leases - protects your landlord rights much better than residential property
- Established professions property valuation, finance, service charges, rent reviews, lease renewals etc
- Currently leases usually allow upward-only rent reviews! (under review)
- Long leases compared to residential - 5-25 years common compared to 6 month short leasehold for residential
- Commercial generally requires less initial refurbishment cost and this can be at the cost of the tenant
- Often minimal management involvement - use a letting agent
- The tenant must pay for delapidations / repairs at the end of the lease, not you!
- The tenant will often sign personal guarantees on smaller properties where their company is not blue-chip - makes rents very secure!
You should also seriously consider buying commercial property within your pension :
- Rental income for the property is paid untaxed into the pension
- Up to 50% of pension assets may be borrowed
- All legal costs and disbursements can be paid for from the fund
- No Capital Gains Tax payable on the sale of property as protected in the pension
- You can usually reclaim all the VAT on property improvements
- You can draw your pension from the rental income rather than sale of the property
- There is no real limit on the number of properties which can be purchased through the pension
- The pension can buy property for your own business
- You can purchase a share of a property through a syndicate if your fund is not large enough
So how do mortgages work for commercial property ? :
There are no standard packaged products as with Buy-to -Let so you need to negotiate with a bank to obtain a decision in principle. Assetz Finance Limited can assist with this - just call us for details.
For commercial investment property via pension, off plan, syndicates or tenanted property generally speaking you should expect to be able to obtain a mortgage with a 20-40% deposit required. The newer and better quality the property the lower the deposit required. Commercial mortgages are generally repayment mortgages but you can sometimes negotiate interest-only periods at the beginning.
Rates quoted will typically be 2-5% over base rate - the good news is that this is covered by the rents obtainable on much commercial property.
For example :
* Office - New-build with tenant in place.
* Price £400,000
* Deposit of £80,000
* Mortgage of £320,000 at 7%
* Repayment mortgage payments of £30,745 pa on a 20 year basis
* Rental income of 9% = £36,000 pa
* Profit of £5,255 pa plus capital gains plus paying off the mortgage
Other examples of properties recently available :
- Retail Restaurant - East Lancs Rd, St Helens
- Rental £35,000 (under review to c50k?)
- Sale price £500,000 Freehold
- Guide price (450-500k)
- 30 yr full repairing/ insuring lease to forte (UK) from 1999
- A Yield of 7%
- Pugh & Co, June 2004
- Offices, Newbury, Berkshire
- Let to Vodafone
- Price: £270,500
- 6.5 % yield
- Rent: £17,625.00 pa
- Lease remaining 8.5 years
- Quintons October 2004
- Offices, Liverpool
- Offers in the region of £475,000
- 10.05 % Yield
- Edward Symmons October 2004
So how can Assetz for Investors help you get started in commercial property investment ? :
Assetz for Investors have negotiated access to some of the best new-build office premises in the country :
- Off-plan modern and very well fitted office units at up to 15% or greater discounts from final phase prices
- Off market commercial property available through our sourcing service
- Option to opt out of stamp duty in many cases
- Designed for the mass rental market - 98% of all businesses in the UK are smaller companies with 1-49 staff
- Small developments with only around 30% going to investors - the rest to owner occupiers
- Located in prime business park locations, high visibility from main roads and in major towns/cities
- Option of purchasing limited numbers of completed units with tenants at higher prices but lower risk and hence lower yield
- 20% deposit mortgages possible
- Syndicated purchase possible to share the investment
- Investment via a pension possible
- Help with finding a tenant whilst still in off-plan phase from the developers direct marketing on your behalf
- 6 month rent guarantees available post completion
Please register below in order to be sent details of commercial property through Assetz for Investors as and when it becomes available.
