For example, I recently had an offer accepted on a commercial property, and I expect to claim around £140,000 in capital allowances. That means I won’t need to pay tax on my profits until I’ve earned over £140,000! This is a huge tax-saving advantage that isn’t available in the same way with residential properties.
2. Longer Leases = More Security
Unlike residential tenants who might leave after 6–12 months, commercial leases typically last 10–15 years. That means:
With a long lease in place, you don’t have to worry about constantly finding new tenants or dealing with frequent vacancies.
3. Higher Yields & Less Maintenance
Commercial properties often generate higher rental yields compared to residential properties. Plus, you can secure a Full Repairing and Insuring (FRI) lease, which means:
This makes commercial property a great option for investors looking for strong returns without the day-to-day headaches of residential property management.
The Downsides of Commercial Property
Of course, no investment is perfect. Here are a couple of things to keep in mind:
Higher mortgage interest rates – commercial loans typically have higher interest costs than residential mortgages.
Less capital appreciation – over time, residential properties generally see faster value growth compared to commercial properties.