Commercial property is valued and taxed differently from homes. Stamp duty uses non-residential rates, the tenant often pays business rates, and investors compare deals on net initial yield.
This calculator covers shops, offices and industrial units: non-residential stamp duty, purchase costs, net initial yield, the mortgage and the return on your cash.
| Purchase price | £400,000 |
|---|---|
| Non-residential stamp duty | £0 up to £150,000, 2% to £250,000, 5% above: £9,500 |
| Other purchase costs | £6,000 |
| Rent | £32,000 a year |
| Net initial yield | £32,000 ÷ £415,500 = 7.7% |
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In England and Northern Ireland non-residential rates are 0% up to £150,000, 2% from £150,001 to £250,000 and 5% above £250,000. There is no surcharge for owning other property.
The yearly rent, less any costs the landlord can’t recover, divided by the price plus purchase costs. It is the standard way commercial investments are compared.
Usually the tenant, while the unit is let. When it is empty, the owner normally becomes liable, after any empty property relief.
Yes, through a commercial mortgage. Lenders usually want a larger deposit than for a home, often 25% to 40%, and look closely at the tenant and lease.
Education, not advice. Rules change and depend on your circumstances. Check GOV.UK and speak to a qualified adviser before you act.