Residential and Commercial Properties

An important question that you will need to consider before undertaking any works on a property will be what sort of property the premises in question is categorised as; residential or commercial. Before making any final decision though, it is important to know the differences, advantages and disadvantages between the two types of properties, taking into consideration factors such as differences in planning required for each as well as the type of scaffolding that may be required. For example, a purely commercial property may not need the same type of scaffolding as a residential property as the access requirements will differ.

Residential Properties

Statistics revealed by the Royal Institution of Chartered Surveyors recently showed that the number of houses available in the UK is at an all-time low, and is expected to remain so for a while longer. The removal of stamp duty for first-time buyers could be advantageous though. The cut on stamp duty means that around £5,000 will be saved by four out of five first-time buyers, with tax previously paid on all properties over £125,000. With the bar being raised to those over £300,000, this saving means that residential households will experience the savings here.

Stamp duty has been blamed in the past for a sluggish housing market amongst younger generations, dampening the demand for residential investments. However, there is an element of risk involved with this news. The independent Office for Budget Responsibility has warned that this push to help get younger people onto the property ladder could end up pushing up house prices too. Subsequently, this may lead to a slowdown in the need for property refurbishments, as homeowners may not be able to afford property improvements.

Commercial Properties

The most common types of commercial property are shops and offices, with similar tax rules applying to:

  • Restaurants
  • Pubs
  • Doctor’s surgeries
  • Warehouses
  • Factories
  • Hospitals
  • Schools
  • Sports centres

In a recent Commercial Property Market survey conducted by the Royal Institutions of Chartered Surveyors (RICS), it has been revealed that there is a growing amount of interest in investing in the commercial property market. There has been particular growth in demand for industrials spaces, with the RICS reporting a 28% increase in enquiries in the first quarter of this year.

Furthermore, with there being something of a surge in investment and interest throughout South London and the surrounding areas, scaffolding in South London is becoming more important as increased works are being undertaken across all nature of properties.

What are the Main Differences Between Commercial and Residential Properties?

One of the biggest differences between commercial and residential property pertains to rental income, with commercial investments tending to be more advantageous. Leases tend to be longer, commonly up to 15 years, and the yields tend to be higher at the rate of 7.6 percent as opposed to 6 percent for residential properties. However, the cost of investing in commercial properties tends to be higher than with buy-to-let properties. Small shops may be around the same price, but other such as huge office blocks or industrial premises are going to require a significant up-front amount of money.

Furthermore, sourcing finance can be difficult as residential properties tend to have better rates for buy-to-let mortgages than commercial properties. In addition, capital growth can be more difficult to quantify than residential. This is due to the fact its value is based on things like the potential for growth or how long rent is committed for, which could be a disadvantage. Commercial property investment also requires much more time and planning than usual required with buy-to-lets, which is important to consider before you take on any projects.

Overall, the decision as to which property market to get into is dependent on individual preferences and circumstances, with factors such as how much personal involvement you are wishing to have, as well as the amount of finance you have available that are going to dictate which will be a better option for you. Certainly, both sectors offer considerable opportunity for investment, though both have exposures to risk.