According to Roma Finance, the specialist bridging finance lender, an increasing number of buy-to-let landlords are diversifying their portfolios by investing in semi-commercial property.
This is in order to protect their investments from higher rates of taxation.
Mixed-use property is presently exempt from tax increases coming into force next month. Landlords are looking to diversify their portfolios in order to offset stamp duty tax rises.
For example, a £500,000 residential buy-to-let property would command stamp duty of £30,000. However, stamp duty on a commercial or semi-commercial property of the same value would be only £14,000.
Investing in mixed-use property also gives investors two types of property, with potentially multiple source of rental income.
Recent lets from Roma include on a retail unit with flats above and pubs with houses attached.
More landlords diversifying to avoid tax increases
Scott Marshall, managing director at Roma Finance, commented: ‘We’re seeing many landlords looking to diversify their portfolios and some are investing in semi-commercial units for the first time. They are keen to take advantage of tax efficient property types and also have another string to their bow when it comes to spending tax risk.’
‘With a residential unit and a residential flat above, they are getting longer tenancies for the shop and good rental prices for the flat. We’ve funded conversions where separate entrances have been created for the different parts of the property and occasionally the exit route for the bridging loan has been to sell one of the units and retain the other,’ he continued.
Concluding, he said: ‘Landlords and property investors are putting in place a variety of strategies to protect their portfolio from increasing taxation and semi-commercial property has a definite role to play in this as they look for new opportunities.’