A month after Britons voted to leave the European Union, Arthur looks at the effect this is having on commercial property in Britain.
In a post-Brexit world, talking about the effect on commercial property may seem a little strange; especially as all that is in the news is how badly house prices have been affected. However there is a good reason for it. The cannier reader may already know that commercial and mixed-use properties are exempt from the new Stamp Duty surcharge. As it stands, a £300,000 buy-to-let would cost £14,000 in Stamp Duty, while a buyer of a mixed-use property would pay just £4,500. A saving of nearly £10,000.
Although going in to commercial property for the first time is a scary prospect, mixed use property is an excellent stepping stone for entering the commercial market. Some may be tempted to buy some commercial property and then convert it to residential space. Unfortunately, if you do this the loophole will quickly close around you. Furthermore, why bother? At the moment the residential market is slowly grinding to a halt at a similar pace as the commercial market. Is there really any point?
Also, in the post-Brexit world there is no guarantee as to what is around the corner. As Theresa May often says “Brexit means Brexit”. The Prime Minister will soon lay out the timeline for activating Article 50. As Britain attempts to end the free movement of people but keep free trade, it may become apparent that commercial property is needed more. In addition to this, commercial properties can actually gain a higher yield than their residential counterparts.
As the markets are moving up, down, left and right, it looks like most people have decided it is a good time to sit on their hands and wait it out. However, for opportunistic buyers willing to take a slight risk, there may be a bargain out there. The best thing is…you can use Arthur to manage both types!