Return on Investment Is your priority to achieve a good income, or capital growth, or both? We suggest you seek valuation advice, as the return on capital and income can differ greatly.
Length of the Lease The length of leases on residential properties tend to be for 6 months or a year. Whereas, commercial leases tend to run for 5 or 10 years.
Legal Structures Residential properties are typically let on Assured Shorthold Tenancies whereas commercial property is governed by the Landlord and Tenant Act 1954. The ability to obtain possession at the end of the tenancy depends on getting the paperwork right at the beginning. If you get it wrong, it could prove very expensive and inconvenient in the long-run.
Taxation Regimes It is not possible anymore to offset the loan interest against tax to buy a residential property, whereas tax relief is available in full for commercial property. There is an extra charge of 3% Stamp Duty Land Tax on residential, but not on commercial property. VAT may apply to commercial but not residential property.
The law in this area can be complex. So take proper advice before proceeding.