Commercial Property
Discussion
With Resi BTL being hit by the tax man and future political risk for more hits...has anyone ventured into Commercial BTL.
It appeals for the reasons above plus more likely to have fewer transitional tenants and self-repairing leases...and currently SIPP friendly.
Would a small retail unit in a busy location be a good move?
It appeals for the reasons above plus more likely to have fewer transitional tenants and self-repairing leases...and currently SIPP friendly.
Would a small retail unit in a busy location be a good move?
+1 would like to know as well.
I'm trying to find a SIPP that allows commercial properties. The one thing i do know is that it cant have any rental income from residential so shops with flats attached are not allowed inside a SIPP.
My concern is business rates on empty properties could they screw up any profit you make if its empty for 6 months?
I'm trying to find a SIPP that allows commercial properties. The one thing i do know is that it cant have any rental income from residential so shops with flats attached are not allowed inside a SIPP.
My concern is business rates on empty properties could they screw up any profit you make if its empty for 6 months?
Frankstar123 said:
+1 would like to know as well.
I'm trying to find a SIPP that allows commercial properties. The one thing i do know is that it cant have any rental income from residential so shops with flats attached are not allowed inside a SIPP.
My concern is business rates on empty properties could they screw up any profit you make if its empty for 6 months?
Most mainstream SIPP providers should allow commercial property holdings. Check out AJ Bell offering http://www.ajbellplatinum.co.uk/.I'm trying to find a SIPP that allows commercial properties. The one thing i do know is that it cant have any rental income from residential so shops with flats attached are not allowed inside a SIPP.
My concern is business rates on empty properties could they screw up any profit you make if its empty for 6 months?
CaptainSlow said:
With Resi BTL being hit by the tax man and future political risk for more hits...has anyone ventured into Commercial BTL.
It appeals for the reasons above plus more likely to have fewer transitional tenants and self-repairing leases...and currently SIPP friendly.
Would a small retail unit in a busy location be a good move?
Yes I've preferred commercial for a few years now and have a small portfolio of same. Have just bought another resi unit tho, so "preferred" doesn't mean stopped doing resi.It appeals for the reasons above plus more likely to have fewer transitional tenants and self-repairing leases...and currently SIPP friendly.
Would a small retail unit in a busy location be a good move?
In my system, size (small) and (busy) location aren't especially important. Different tenants need different sizes of premises and some prefer- even need - quieter spots to trade from. This kind of widens the spectrum of the stock I'd be interested in.
Certainly nothing wrong with small premises in busy places though. Why would there be?
Dunno about the Sipp part, tho'. Smells like 'something pension' and therefore comes with built in issues and headache.
Edited by drainbrain on Friday 29th September 11:34
drainbrain said:
CaptainSlow said:
With Resi BTL being hit by the tax man and future political risk for more hits...has anyone ventured into Commercial BTL.
It appeals for the reasons above plus more likely to have fewer transitional tenants and self-repairing leases...and currently SIPP friendly.
Would a small retail unit in a busy location be a good move?
Yes I've preferred commercial for a few years now and have a small portfolio of same. Have just bought another resi unit tho, so "preferred" doesn't mean stopped doing resi.It appeals for the reasons above plus more likely to have fewer transitional tenants and self-repairing leases...and currently SIPP friendly.
Would a small retail unit in a busy location be a good move?
In my system, size (small) and (busy) location aren't especially important. Different tenants need different sizes of premises and some prefer- even need - quieter spots to trade from. This kind of widens the spectrum of the stock I'd be interested in.
Certainly nothing wrong with small premises in busy places though. Why would there be?
Dunno about the Sipp part, tho'. Smells like 'something pension' and therefore comes with built in issues and headache.
@Drainbrain if i were to buy this sold property: http://northeastcommercial.co.uk/commercial/for-sa...
Price : £250K+
Occupational Lease
The property is occupied by Emmaus Gateshead by way of a 6 year lease from June 2012. The current passing rent is £22,000 per annum and there are no further rent reviews within the term.
Business Rates
The property has a current rateable value of £29,500.
If the property was empty would I have to pay the business rates? So is there a greater risk of cost compared to residential when unoccupied? So does commercial property tending to have higher yields than residential?
Sorry for the dumb questions. I am gonna do some proper research but think sometimes it just easier to ask on here
Frankie
Frankstar123 said:
If the property was empty would I have to pay the business rates? So is there a greater risk of cost compared to residential when unoccupied? So does commercial property tending to have higher yields than residential?
Sorry for the dumb questions. I am gonna do some proper research but think sometimes it just easier to ask on here
Frankie
in a lot of counties even with an empty house the owner would still have to pay council tax. Sorry for the dumb questions. I am gonna do some proper research but think sometimes it just easier to ask on here
Frankie
superlightr said:
in a lot of counties even with an empty house the owner would still have to pay council tax.
So do you have to pay then or not? There are different rules for council tax if unoccupied or single person.From my council site:
Empty Properties
Short-term unoccupied and unfurnished properties will qualify for a 25% discount for a period of six months. Additionally, if the property is reoccupied within one month of becoming unoccupied and unfurnished a 100% discount will be awarded for the entire period.
A property which requires or is undergoing major work or structural alteration may qualify for a 25% discount for a period of up to 12 months. The discount will continue for up to six months after the work is complete as long as the property remains unoccupied and the period is no longer than 12 months. This discount only applies within the first two years of the property becoming unoccupied and unfurnished.
Obviously this is for residential.
Frankstar123 said:
Sorry @CaptainSlow for jumping on your post.
@Drainbrain if i were to buy this sold property: http://northeastcommercial.co.uk/commercial/for-sa...
Price : £250K+
Occupational Lease
The property is occupied by Emmaus Gateshead by way of a 6 year lease from June 2012. The current passing rent is £22,000 per annum and there are no further rent reviews within the term.
Business Rates
The property has a current rateable value of £29,500.
If the property was empty would I have to pay the business rates? So is there a greater risk of cost compared to residential when unoccupied? So does commercial property tending to have higher yields than residential?
Sorry for the dumb questions. I am gonna do some proper research but think sometimes it just easier to ask on here
Frankie
@Drainbrain if i were to buy this sold property: http://northeastcommercial.co.uk/commercial/for-sa...
Price : £250K+
Occupational Lease
The property is occupied by Emmaus Gateshead by way of a 6 year lease from June 2012. The current passing rent is £22,000 per annum and there are no further rent reviews within the term.
Business Rates
The property has a current rateable value of £29,500.
If the property was empty would I have to pay the business rates? So is there a greater risk of cost compared to residential when unoccupied? So does commercial property tending to have higher yields than residential?
Sorry for the dumb questions. I am gonna do some proper research but think sometimes it just easier to ask on here
Frankie
Yes responsibility for rates at empty properties reverts to owners although there can be exceptions exemptions and variations which would be a matter to take up with the local authority.
In general the biggest problem with commercial is void length and the bills that accrue (not just rates) when it's empty. For many reasons some can take much longer than others to get reoccupied, and voids in residential are usually much shorter, although not always.
As to yields, it can vary. Usually with residential a simple "rule" is that the more expensive/valuable the property is, the worse the rental return. In commercial, usually the same.
My suggestion - though that's all it is - is that unless you're a billionaire and if you're new to this you start with something much humbler. Same sort of thing as the Emmaus shop just maybe a lot smaller. And a lot cheaper.
And try not to pay more than 10 times the rent for the place.
That way if you hate it you're not too chunkily committed, and small (and cheap) commercial is often much faster and easier to dispose of than big.
The thing I liked best about your shop was the tenant. IMO would be highly likely to renew that lease in 6 years time and probably a pleasure to deal with - as many larger organisations aren't. But I think in most circumstances it's folly to buy a property just because of the tenant.
Anyway, good luck!
Edited by drainbrain on Friday 29th September 17:51
Frankstar123 said:
superlightr said:
in a lot of counties even with an empty house the owner would still have to pay council tax.
So do you have to pay then or not? There are different rules for council tax if unoccupied or single person.From my council site:
Empty Properties
Short-term unoccupied and unfurnished properties will qualify for a 25% discount for a period of six months. Additionally, if the property is reoccupied within one month of becoming unoccupied and unfurnished a 100% discount will be awarded for the entire period.
A property which requires or is undergoing major work or structural alteration may qualify for a 25% discount for a period of up to 12 months. The discount will continue for up to six months after the work is complete as long as the property remains unoccupied and the period is no longer than 12 months. This discount only applies within the first two years of the property becoming unoccupied and unfurnished.
Obviously this is for residential.
CaptainSlow said:
The lease expires June next year....the devil is in the detail!!
frankstar123 said:
@Drainbrain if i were to buy this sold property: http://northeastcommercial.co.uk/commercial/for-sa...
The devil is in the detail of the question. 
i was using it as an example.drainbrain said:
Yes responsibility for rates at empty properties reverts to owners although there can be exceptions exemptions and variations which would be a matter to take up with the local authority.
In general the biggest problem with commercial is void length and the bills that accrue (not just rates) when it's empty. For many reasons some can take much longer than others to get reoccupied, and voids in residential are usually much shorter, although not always.
As to yields, it can vary. Usually with residential a simple "rule" is that the more expensive/valuable the property is, the worse the rental return. In commercial, usually the same.
My suggestion - though that's all it is - is that unless you're a billionaire and if you're new to this you start with something much humbler. Same sort of thing as the Emmaus shop just maybe a lot smaller. And a lot cheaper.
And try not to pay more than 10 times the rent for the place.
That way if you hate it you're not too chunkily committed, and small (and cheap) commercial is often much faster and easier to dispose of than big.
The thing I liked best about your shop was the tenant. IMO would be highly likely to renew that lease in 6 years time and probably a pleasure to deal with - as many larger organisations aren't. But I think in most circumstances it's folly to buy a property just because of the tenant.
Anyway, good luck!
Hi Drainbrain,In general the biggest problem with commercial is void length and the bills that accrue (not just rates) when it's empty. For many reasons some can take much longer than others to get reoccupied, and voids in residential are usually much shorter, although not always.
As to yields, it can vary. Usually with residential a simple "rule" is that the more expensive/valuable the property is, the worse the rental return. In commercial, usually the same.
My suggestion - though that's all it is - is that unless you're a billionaire and if you're new to this you start with something much humbler. Same sort of thing as the Emmaus shop just maybe a lot smaller. And a lot cheaper.
And try not to pay more than 10 times the rent for the place.
That way if you hate it you're not too chunkily committed, and small (and cheap) commercial is often much faster and easier to dispose of than big.
The thing I liked best about your shop was the tenant. IMO would be highly likely to renew that lease in 6 years time and probably a pleasure to deal with - as many larger organisations aren't. But I think in most circumstances it's folly to buy a property just because of the tenant.
Anyway, good luck!
Edited by drainbrain on Friday 29th September 17:51
Thanks for the response, great information. I was just using this as link as an example property. It was the first business that came up in my search.
I'm a very cautious chap and will probably start small (if i do actually commit to commercial property).
Thanks again.
I hold commercial property in my SIPP (avoid Hornbuckle Mitchell like the plague btw!!!), some of it not a million miles away from that example coincidently.
Couple of points to add. Re empty rates. You will be liable for empty rates as a general rule, although you will typically get a 3 month free period after it becomes void. As above there can be specific local circumstances.
The rateable value is not what you pay/are liable for, you pay a multiplier of this which is around 46/47% of the RV.
Standing charges for utilities can be considerably more that you might appreciate, so again can quickly mount up if the property is empty.
FWIW, I buy commercial property that I can get an angle on, so either very cheap/distressed sale or that I am confident I can obtain a resi planning consent on. You can hold commercial property (or land for that matter) in a SIPP with a residential planning consent, but you are not allowed own residential property.
So for example you can buy commercial property/land for £x, spend some of your SIPP money on seeking a residential consent then flipping it to make some money. More labour intensive than a robot investment, but fun if you're into that sort of thing. You also make much bigger returns, but you really need to know what you're doing.
Couple of points to add. Re empty rates. You will be liable for empty rates as a general rule, although you will typically get a 3 month free period after it becomes void. As above there can be specific local circumstances.
The rateable value is not what you pay/are liable for, you pay a multiplier of this which is around 46/47% of the RV.
Standing charges for utilities can be considerably more that you might appreciate, so again can quickly mount up if the property is empty.
FWIW, I buy commercial property that I can get an angle on, so either very cheap/distressed sale or that I am confident I can obtain a resi planning consent on. You can hold commercial property (or land for that matter) in a SIPP with a residential planning consent, but you are not allowed own residential property.
So for example you can buy commercial property/land for £x, spend some of your SIPP money on seeking a residential consent then flipping it to make some money. More labour intensive than a robot investment, but fun if you're into that sort of thing. You also make much bigger returns, but you really need to know what you're doing.
drainbrain said:
You're more than welcome and I hope what was said is sensible.
There are so many empty/vacant shops out there isn't this a much more risky investment than residential property ? With everyone now buying everything on the internet or in big shopping malls , is buying shops a long term sensible option?
( However I know there has been a huge growth in fast foods shops (Dominos pizza ) /restaurants and beauty places )
How do u assess a property especially cheaper shops with so many being empty if ones tenant goes bust u may never get another !
Thoughts on this ?
https://www.auction.co.uk/commercial/LotDetails.as...
Attached to doctors surgery and people always need medicine !
jonny70 said:
There are so many empty/vacant shops out there isn't this a much more risky investment than residential property ?
With everyone now buying everything on the internet or in big shopping malls , is buying shops a long term sensible option?
( However I know there has been a huge growth in fast foods shops (Dominos pizza ) /restaurants and beauty places )
How do u assess a property especially cheaper shops with so many being empty if ones tenant goes bust u may never get another !
Thoughts on this ?
https://www.auction.co.uk/commercial/LotDetails.as...
Attached to doctors surgery and people always need medicine !
Looks good to me. Not a great yield but a very good tenancy and assuming the surgery's there 'forever' even if Boots left it'd be quickly uptaken by another pharmacy.With everyone now buying everything on the internet or in big shopping malls , is buying shops a long term sensible option?
( However I know there has been a huge growth in fast foods shops (Dominos pizza ) /restaurants and beauty places )
How do u assess a property especially cheaper shops with so many being empty if ones tenant goes bust u may never get another !
Thoughts on this ?
https://www.auction.co.uk/commercial/LotDetails.as...
Attached to doctors surgery and people always need medicine !
Try asking the auctioneer what the seller would take to withdraw it from the auction. And remember you've got a few entry fees too.
For a lot of reasons this is a good one too:
https://www.auction.co.uk/commercial/LotDetails.as...
Edited by drainbrain on Wednesday 4th October 22:08
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