The Peterborough Evening Telegraph - - Your -

There are ob­vi­ous sim­i­lar­i­ties be­tween the two sec­tors e.g. both are prop­erty based and gen­er­ate rental in­come. How­ever, there are also sig­nif­i­cant dif­fer­ences.

The most ob­vi­ous is the prop­erty it­self. A res­i­den­tial BTL will be a house or flat, whereas com­mer­cial prop­erty in­vest­ments in­clude in­dus­trial and re­tail units and of­fices. They can vary sig­nif­i­cantly in size and value, whereas the value of a typ­i­cal res­i­den­tial BTL prop­erty out­side London might not ex­ceed £200,000.

Res­i­den­tial tenants will usu­ally have signed an agree­ment known as an As­sured Shorthold­te­nancy. They are usu­ally sim­ple doc­u­ments and in­clude re­spon­si­bil­i­ties of the ten­ant and de­tails of rent payable and the term of the lease, usu­ally six or 12 months.

The agree­ment for a com­mer­cial prop­erty will be con­tained within a more de­tailed doc­u­ment. The lease term is likely to be longer, pos­si­bly up to 20 years, but will usu­ally in­clude the right of the ten­ant to “break” the agree­ment but only at cer­tain de­fined times in the fu­ture.

The land­lord will also have the right to re­view the rent payable at set dates, of­ten five-yearly in­ter­vals. Com­mer­cial tenants will also vary be­tween blue chip covenants, e.g. a High Street en­tity to lo­cal, in­de­pen­dent busi­nesses.

Be­fore mak­ing any decision I strongly rec­om­mend you dis­cuss this with your ac­coun­tant or pro­fes­sional ad­vi­sor.

With Steve Cox, Com­mer­cial Lend­ing Man­ager of Nor­wich and Peter­bor­ough Build­ing So­ci­ety Tel: 01733 372425

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