As property prices fall, many people are considering taking out commercial mortgages in order to cash in on rental properties. This trend may continue for quite sometime as foreclosures become more common and homeowners seek new places to live until they can get their credit back on track. Although some commercial mortgages are in trouble, they do appear to be gaining in popularity at this time.
However, Laura Woodward of Haart, the estate agent, said: “Now that property prices have fallen by 15% this year across Nottingham, you are almost guaranteed to achieve a rental yield above 8% in prime areas.” Parents should make the most of tax breaks to maximise returns if their offspring attends university. They could consider buying a student flat on the basis of owning 99% of the property, with their student child having the remaining 1%.
“They could then enter a formal profit-sharing agreement with the child so the profits go to the student, taxed at a low or For example, a higher-rate taxpayer with a £200,000 student property on a net yield of say 5%, providing an income of £10,000 a year, would save up to £3,087 on that income.”
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Related reading: Commercial Mortgages
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