UK landlords ditch buy-to-let, invest in shops instead

Landlords in the UK are abandoning the buy-to-let strategy that has been their mainstay over the past several years, investing instead in high street shops.

The investors are switching from buy-to-let – buying a property to let it out, rather than live in it – to commercial property as they seek higher yields and escape from stringent new tax and lending rules for residential landlords.

Figures from Allsop, the auction house, show a three-fold increase in the number of investors seeking to diversify into small shops or parades.

In just a few months’ time, mortgaged buy-to-let properties will become subject to a tougher tax regime and put thousands of landlords at risk of losing money, the Telegraph reported. As a result, shops, restaurants and offices are looking like a more attractive proposition.

Allsop’s George Walker said the auction house has seen three times the number of buy-to-let converts switching to commercial property since the tax changes were announced.

"We're getting a lot of investors into our market because of the changes to buy-to-let. Once they have bought one, they can't believe the simplicity and want to do it again," he told the Telegraph.

Graham Chilvers, a landlord with 30 years' experience, told the newspaper he had turned to commercial property for this reason. "I thought about going down the limited company route, but I understand the government are already looking into closing that loophole, and I think it would cost too much to do," he said.

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