Commercial property offers three times greater yield than residential, says research

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Commercial investments produce an average yield of 10.7% while residential properties offer just 3.7%, new research has claimed.

Scotland is home to the highest commercial yield at 20.4%, along with the South West (13.7%), while Scotland is also where investors can find the highest residential yields – along with the North West – at 4.4% and 4.3% respectively, according to agent Benham and Reeves.

But when it comes to the initial cost of investing, the average residential property needs a £259,850 budget, but with an average value of £454,384, a commercial investment needs a budget that’s 75% larger.

Benham and Reeves says that it is also easier to find residential stock as the market offers far greater choice, with 541,966 listings compared to just 12,022 across the commercial space.

London and the South East rank highest for residential stock availability, accounting for 19% of all listings, followed by the East of England (12%).

SW and NW

Those eyeing a commercial investment are better placed investing in the South West and North West where there’s greater stock at 12.9% and 12% respectively.

Benham and Reeves director Marc von Grundherr says both the residential and commercial markets have been impacted by the pandemic which means that it’s hard for investors to know where to put their money.

He believes the best approach is a balanced portfolio.

Von Grundherr (pictured) adds: “While a commercial investment may offer a higher yield, the recovery timeline as a result of the pandemic is set to stretch on far longer than that of the residential rental market and residential property investment remains by far the dominant force where availability, affordability and total sector value is concerned.

But commercial investment can provide a more hands-off approach for those doing so through a third-party platform, while the amateur buy-to-let landlord is sure to spend more time sorting out tenant issues.”

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EXPERT: Axing ‘No fault’ evictions could scupper rent-to-rent model

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Abolishing Section 21 ‘no fault’ evictions risks sounding the death knell for the current rent-to-rent model, a leading housing legal expert has claimed.

Anthony Gold solicitor Robin Stewart (pictured) believes that when residential tenancies in England become effectively indefinite in length, landlords are likely to be even more cautious about who they grant tenancies to.

Rent-to-rent businesses who grant assured shorthold tenancies won’t be able to claim they can guarantee things will go smoothly at the end of their tenancy and there will be no way to get the property vacant to return it to the landlord.

“This suggests to me that rent-to-rent will not survive as a popular business model in its current form after the abolition of Section 21 notices,” he says.

However, Stewart adds that it’s unlikely rent-to-rent will disappear completely.

Some businesses will use ‘licence agreements’ rather than tenancy contracts, on the basis that a licence can be terminated by ‘notice to quit’ whenever required.

“This can be legitimate if the contracts really are licence agreements but using sham licence agreements when the circumstances really amount to a tenancy is well recognised as a scam, and this can be prosecuted as a criminal offence under consumer protection legislation,” he says.

Other rent-to-rent businesses will not attempt to evict their tenants, and when the agreement ends and they hand the property, the landlord will become the direct landlord.

 “This might be a good thing – after all, why should tenants have to leave a property just because there is a change of management,” says Stewart

“If the landlord does not want to have to deal with the tenants they have ‘inherited’, they can appoint a managing agent. This arrangement might become the norm, but I suspect that it will prove to be unattractive to landlords.”

Read Robin Stewart’s comments in full on the London Property Licensing website.

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Possession order granted for property guru’s flat after racking up £200k rent arrears

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Bankrupt property guru Glenn Armstrong faces having his home repossessed after racking up rent arrears of more than £209,000 while he promoted his training courses.

A possession order was granted against his wife Charlotte Geneva after Clerkenwell County Court (pictured) heard the lease on the property in Blackfriars Road, London, was taken out on 18th July 2019 but that no rent was paid from October 2019. The couple will have to leave by 24th August or face eviction.

Journalist Chris Mitchell reports that Geneva shouted at him in court and had to be asked to leave. Last month, Mitchell was exonerated of harassment and malicious communications allegations against the couple.

He says: “She called the police…who refused to take any action and sat in court to ensure she did not flare up again.

False claims

“The judge refused an application by her solicitor to have the hearing in private, as the police had advised the judge that previous false claims had been made against the journalist which had all been ‘no further action’ and that the stalking civil complaint was also dropped by the police when investigations were completed.”

Armstrong was declared bankrupt in February, owing £4.9 million to dozens of creditors.

He also has 10 unpaid county court judgements against his related companies dating back to 2017, totalling £566,987, as well as 10 unpaid personal county court judgements totalling £418,342.

Armstrong (pictured), who has appeared on Channel 4’s How the Other Half Live and The Secret Millionaire, has spent years selling courses and home study programmes for people wanting to make cash out of property.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Possession order granted for property guru’s flat after racking up £200k rent arrears | LandlordZONE.

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Lettingsupermarket celebrate 10th anniversary with Property118 exclusive deal

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Following the release of their new management system and landlord interface, our recommended letting agent Lettingsupermarket.com are offering property118 readers an exclusive deal to celebrate their 10th year in business.

Whether you are looking to let your property or transfer management immediately or in the next 12 months by signing up in the month of August you will receive 6 months management at a 50% discount when instructing Lettingsupermarket.com in the next 12 months. 

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