Why are mixed-use developments becoming so popular with investors?

A mixed-use property is a property which has multiple uses, which could be a flat with a shop beneath it. These properties often bridge the gap between commercial and leisure spaces, making these to be interesting investment opportunities as you can rent it out private tenants as well as businesses. A lot of tenants like renting mixed-use properties as it means that they are likely to be close to other amenities like shops or gyms which they share their land with. They are also sometimes cheaper to rent than similar properties and you do have the disadvantage of the potential noise from the business downstairs. 

One big advantage of mixed-use developments is due to tax savings as the landlord of a mixed-use property usually only pays stamp duty on the whole property as a commercial unit. This is usually less than if they were to just buy a residential property. Also, you can get multiple sources of income from these properties, charging business rates to rent the commercial area and domestic rates for the tenants living in the residential area. Despite the renters paying a usually lower than the average rate for these two properties due to the space being compromised in some instances, multiple income streams are likely to make you more money than just buying a solely residential or commercial property. Multiple income streams also give you greater financial security as if one area of the property is vacant, you are still likely to have the income coming through from the other half. So, for these reasons, they are so popular with investors and these developments are increasing, with a study from propertyreporter.co.uk saying that mixed-use properties ‘account for 24.1% of the national whole’ of properties which were for sale at the time of their study. 

In conclusion, we think that mixed-use properties, whilst having more complications than simply finding a buy-to-let, could be a great way to vary your portfolio. Speak to Harbour Property Group to find out more about mixed-use properties.

Photo shows mixed-use property where people rent flats above shops and residential use of the property below. Sp this shows a brick building with a shop at the bottom.
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