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Real property developers may appear to be engaged in commercial activities. Since the Stamp Duty Land Tax (SDLT) will be 3% on all owner-occupied and second home purchases from April 2016, it has given the investor some food for thought. Several have submitted capital expenditure proposals and are now dealing with real property brokers trying to "seal" the deal with a real property sale before the increase in taxes.
Obviously no one can forecast the futures, and how drastic the impact of the SDLT expansion will be on the overall buy-to-lease landscape will be revealed in the next few weeks and years. Is the investor totally discouraged from buy-to-let or will they absorb the additional levy as part of their portfolios?
On the other hand, other depositors are apparently already considering alternative commercial properties and semi-commercial properties that are not affected by the new taxation regulations. PRO's of commercial real estate investments? Commercial property market activities have already intensified as many companies seek to buy, fund or borrow their own commercial space.
Who would not consider this at least as an optional measure if the commercial lending interest is only 1.99% above the basic interest and the loan to value (LTV) is up to 85%? Furthermore, many real estate buyers are buying commercial real estate for the first market - which could be an early indication of portfolio diversification without the need for the additional SDLT.
Of course it is worthwhile to seek professional consulting when making investments in a new area of the markets or a new finance instrument. A number of things need to be considered when it comes to commercial real estate investments. And by and large, the purchase and management of commercial real estate is more complicated than the purchase of housing, and a lawyer will be indispensable.
However, the complexities should not deter you, as the pros usually predominate over the cons. As a result, many developers appear to be turning to commercial real estate as a profitable proposition that is not covered by the new SDLT regulations. At Dental & Medical Financial Services we can help you with all your commercial real estate investments and commercial mortgages needs.
Give us a call today and get help from experts.