After the government brought in the 3% stamp duty surcharge for 2nd home owners back in April there was initially a slight decrease in the number of buy to let purchases. A lot of buyers have now simply factored the cost in to the overall return from their investment and assuming a property is kept for 10 years it is only the equivalent of 0.3% a year.
One way to avoid the surcharge is to look at buying a mixed use development as these do not attract the charge whatsoever. Whilst traditionally small investors have shied away on the basis that it may need a different set of skills to manage a commercial property, most landlords should be capable of dealing with a shop, an office or a service business.
We’ve currently got a mixed use development on the market for £260,000 just up the road from our Town Centre office in Tor Hill Road. It comprises three 1 bedroom flats and a hairdressers on the ground floor, generating in excess of £23,000 per annum with potential to grow that to around £25,000 giving a gross yield of around 9%. The stamp duty would be £3,000 as opposed to £10,800 if it had been a fully residential building. There are some mortgage considerations to be aware of when buying a mixed-use development in that some lenders won’t consider them but there are enough that will to make it still a competitive market.