Buy-to-let a solid investment compared to commercial

16 June 2020 | General

Buy-to-let is currently a stable investment choice compared to commercial, offering a typical yield of 5%, research from Sourced Capital shows.

The peer-to-peer lending platform looked at the average annual return on £500,000 across buy-to-let and commercial markets – a typical buy-to-let would return you £153,480 over five years based on its calculations.

The North East of England is said to be the best area to buy, with a yield of 5.5%, followed by the North East (5.0%) and Yorkshire and the Humber (4.8%).

On average commercial property is expected to net a return of 2.2%, though the average is skewed own by commercial retail, which is expected to lose you 6.2% per year.

Elsewhere commercial Central London office space would offer a return of 5.8%, commercial office space would offer 6.9%, while commercial industrial provides a return of 7.6%.

Stephen Moss, managing director of Sourced Capital, said: “It can be hard to know where your money is best invested in times like these, but on the whole, residential bricks and mortar certainly makes for the most consistent option both in the long-term, and regardless of geography.

“Of course, commercial property carries a greater risk, but depending on which sector you opt for, these risks can be greatly rewarded.

“However, with so much uncertainty surrounding much of the commercial space and to a degree, the residential market as well, it can be hard to decide where to place your bets. This has been the driving factor behind many opting for a more hands off approach, with platforms like Sourced Capital seeing an increase in popularity from more traditional bricks and mortar investors.

“As a result, you get the option of keeping your investment strategy moving while letting trained experts decide which developments are likely to bring a good return on your behalf.”

This post has originally been featured in Property Wire.