Residential versus Commercial Property


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Expert Opinion – Gemma Hawley, Property Manager at Holt Commercial

We’re often asked by clients whether they are better off investing in residential or commercial property to get the most bang for their buck.
I have experience in both markets and that puts me in a great position to be able to guide you through the risks and rewards of both types of investment.
In this blog, I have set out some of the differences between residential and commercial property investment and some of the considerations you will need to make before deciding which route to go down.
Residential properties are much more than a place to call home and here in the UK we have a diverse range of properties available – from charming country cottages through to city apartments.
The benefits of investing in residential property include:
Easier Financing
Residential properties are generally more accessible and easier to finance than their commercial counterparts, which often require higher deposits and stricter lending criteria.
Lower Entry Costs
The entry costs for residential properties are typically lower, allowing investors to start their journey with less initial capital.
High Demand for Rental Properties
The shortage of homes, coupled with a significant number of landlords leaving the sector, have heightened demand for rental properties. This has created an opportunity for residential landlords to choose from a larger pool of potential tenants, reducing vacancy periods and prompting rental increases.
Long-term Growth Potential
Historically, the UK residential property market has demonstrated strong long-term capital growth, making it an attractive option for investors with an eye on the future. However, a change in the law has drastically reduced profits for landlords, who are no longer be able to claim mortgage interest, or any other property finance, as tax deductible.
Commercial properties are designed primarily for business purposes for a variety of sectors, including retail, logistics, factories, offices, leisure, and healthcare.
The benefits of investing in commercial property include:
Reliable Income Streams
Longer lease terms, which are common with commercial properties, translate to more predictable cashflows, providing stability for investors seeking regular income.
Passive Management Potential
Commercial properties often operate on Full Repairing and Insuring (FRI) leases, making them more hands-off for landlords. Tenants bear responsibility for repair, maintenance, and insurance costs, minimising the liability for property owners.
Pension Investment Opportunities
Commercial properties can be purchased using pensions, specifically through a Self-Invested Personal Pension (SIPP) or a Small Self-Administered Scheme (SSAS). This flexibility allows investors to leverage their pension funds for property investments.
Tax Benefits
Buying a commercial property in the UK which is already leased may offer the advantage of mitigating stamp duty land tax.
Ultimately, choosing between residential and commercial property requires careful consideration of your investment goals, financial situation, and risk tolerance and, with more than 100 years of combined property experience here at Holt Commercial, we are here to advise you on the right route to take for you.
Having as diverse a portfolio as possible is always advisable but, depending on how much you are looking to invest and how quickly you want a return, will help to decide on the most suitable advice for you.
If you would like to discuss your property investment plans with a member of the team here at Holt Commercial, please call 024 7655 5180 or email

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