Scott Marshall

Roma records 50% enquiry surge as landlords turn to mixed-use property

Roma Finance has reported a rise in the number of loans it has issued to landlords moving into semi-commercial property.

The bridging lender has posted a 50% increase in enquiries during the last six months with many going to completion or in the pipeline as landlords look to diversify and protect their portfolios from tax rises.

Mixed-use properties are exempt from some of the tax increases which will come into force from 1st April, meaning landlords and developers are looking to snap up such units to offset stamp duty tax hikes.

Roma has found that a £500,000 residential buy-to-let property would incur stamp duty of £30,000, while a commercial or semi-commercial property of the same value would have stamp duty of only £14,000.

The bridging lender has also found that mixed-use developments can have higher rental yields with Roma seeing such projects deliver double the yield compared to a purely residential investment.

“We’re seeing many landlords looking to diversify their portfolios and some are investing in semi-commercial units for the first time,” said Scott Marshall, managing director of Roma (pictured above).

“They are keen to take advantage of tax-efficient property types and also have another string to their bow when it comes spreading tax risk.”

Popular mixed-use properties Roma has recently been involved with include a retail or workshop unit with flats above and pubs with a residential house attached.

Roma added that in order to maximise the income and offset tax, renovation work is usually required for these properties, mainly to make the respective units fit for purpose and add a separate entrance to each part of the building.

“With a retail unit and a residential flat above, they are getting longer tenancies for the shop and good rental prices for the flat,” Scott added.

“We’ve funded conversions where separate entrances have been created for the different parts of the property and occasionally the exit route for the bridging loan has been to sell one of the units and retain the other.

“Landlords and property investors are putting in place a variety of strategies to protect their portfolios from increasing taxation and semi-commercial property has a definite role to play in this as they look for new opportunities.”

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