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Shropshire investors turn to commercial property

Shropshire landlords and investors are eyeing a shift from the volatile residential market to commercial property in search of improved and more stable returns, a conveyancing expert at ORJ has revealed.

Commercial Property Solicitor Sian Wolstenholme said moves by the Government to make residential buy-to-let more challenging are encouraging investors to switch to the commercial arena.

In the recent Budget, Chancellor Jeremy Hunt cut the higher rate of Capital Gains Tax from 28% to 24% in the latest attempt to encourage teetering landlords and second homeowners to sell their properties.

Meanwhile, leases to tenants of shops and offices are often granted for a longer initial term than for residential assured shorthold tenancies. The turnover of tenants is also often lower, making commercial property a more appealing prospect.

Sian said there are an abundance of commercial property investment opportunities currently available in Shropshire, particularly in Shrewsbury where the long-awaited town centre regeneration is underway.

Sian said: “It’s a tough market for residential investors with measures in place to make buy-to-let less appealing, including increased tax liabilities and more red-tape. Consequently, residential landlords are selling up in their droves.

“I believe a good proportion of these investors will turn to commercial property such as office blocks, shops or industrial units where returns are better and often it is less time-consuming.

“I recently had a client who had been in the residential sector for 20 years but was now looking to buy a six-unit commercial property with five to 10-year leases as this was a more attractive proposition for him.

“With the multi-million-pound regeneration project underway in Shrewsbury, and continued expansion of Telford, there are real opportunities.”

Sian said commercial landlords need to ensure there are certain measures in place such as building insurance , asbestos report, electrical certificates and fire risk assessments  but, once they are obtained, there is usually little input required on a day-to-day basis and responsibility is passed to the  commercial tenant.

“Commercial property is typically a better long-term investment than residential, which can be more volatile,” she said.

“Rental yields are generally higher and tenants, too, tend to be less demanding and more reliable payers.”

Sian said ORJ’s Shrewsbury-based conveyancing team had enjoyed a buoyant start to the year.

“January was unusually busy – we were rushed off our feet and, speaking to others in the industry, that was across the board,” she said.

“Lending was a big issue last year. We had many matters fall through either because the client became nervous or the lender pulled out, but things have settled now.

“Shropshire is a vibrant market. Even when the residential market dropped, commercial carried on unabated.”

There are several factors that investors should consider before entering the commercial property market, including setting up the right holding vehicle and abiding by compliance laws.

ORJ has expert lawyers that can advise on all commercial property matters. Email team@orj.co.uk or call 01743 355000.