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Introduction
Dubbed ‘Britain’s Growth hotspot’, Leicester is a great place to invest in. It’s the largest economy in the East Midlands and one of the best-connected areas of the UK.
After the undeniable challenges caused by the pandemic, the signs are incredibly positive for Leicester, with tens of millions of pounds of investment headed to the area in the coming years.
Significant investment projects include:
- A share of a £203m Levelling Up Fund boost for the East Midlands to revitalise Leicester Railway Station, transform Pilot House in Leicester into high quality accommodation and develop Pioneer Park, which supports a fast-growing space and technology sector
- £40m from the Transforming Cities Fund, including funding for a city centre electric bus link to connect rail and bus stations with the city centre
- £19m from the Zero Emission Bus Regional Area to support delivery of 96 zero emission buses
This pattern of investment isn’t limited to Leicester itself either, it covers the whole county. For example, £40m is being spent in Loughborough to regenerate parts of the town centre, the building of a new science centre at Twycross Zoo and £7m investment in the creation of woodland in the East Midlands, including Leicestershire.
In addition, the region is home to global skills centres, cutting edge space technology development and an impressive who’s who list of the world’s biggest companies.
With three world-class universities and 60,000 students, it’s also one of the youngest and most diverse communities in the UK, vibrant creativity in every corner of the county.
In a hurry? Here’s a quick summary
With savings rates low, property is still a lucrative way to generate a return on your investment and the biggest yields are often found in commercial property.
If you’re interested in investing in commercial property in Leicester, but you’re not sure how to get started, read on for more information about the area, commercial property mortgages, types of properties, tenant rights and more.
As experts in property management, Readings can help you on every step of the journey.
Are commercial properties worth the investment?
The first question you might be asking yourself is ‘are commercial properties worth the investment?’ This usually comes down to the time, the place, the property and the market. There can’t really be a hard yes or no answer as each property and location is different.
In general terms, property offers a good investment opportunity when compared with more traditional savings and investment options.
There are two main ways to earn money from commercial property; renting it out and capital growth from any increase in value of the property.
Typically, you can expect a higher yield from a commercial property than a residential property, attracting anything up to 10%. This can often be attributed to the longer lease available with a commercial property.
As more people now look to return to the workplace, some types of commercial properties are expected to become an increasingly popular investment.
So while the initial costs can be higher and property investment always carries an element of risk, commercial property can be an attractive proposition.
What makes Leicester an ideal location to invest in commercial property?
According to Visit Leicester, this region has seen a 35% growth in business stock over the last five years and is second only to London in terms of business start-up and survival rates.
It has a hugely diverse economy, from thriving high streets to globally-renowned companies, to the most cutting-edge of space technology. It has great schools and three universities, making it a hive of activity.
It is one of the UK’s fastest growing business locations, with a £26bn economy – not to mention the millions of pounds worth of planned regeneration. Yet at the same time, locating in Leicester can save businesses on average £15,000 per year per employee when compared to a London location.
Leicester is also incredibly diverse and cultural, home to a variety of festivals, music and arts events and top tourist attractions.
Its excellent road, rail, air and transport links also make it a prime location for quickly accessing all parts of the UK. The region boasts East Midlands airport, which is the UK’s largest pure cargo airport and a national hub for major distribution brands such as DHL, TNT, UPS and Royal Mail.
What classifies as a commercial property?
There are various different types of commercial property including:
- Warehouses
- Retail
- Office
- Industrial
- Leisure/hospitality
- Healthcare
Commercial property types are divided into classes as part of official planning law which determines how a particular building should be used. Any operations within a commercial premises must be in accordance with its approved business use, although it is possible to seek planning permission from a local authority to change it.
Business use for a property generally falls under one of 12 different classes from A1 – Shops right through to D2 – Assembly and Leisure. Classes in between include A2 – Financial Services, A3 – Food and Drink, B1 – Business, B2 – General Industrial, B8 – Storage and Distribution and so on.
Check out the Readings website to see what commercial properties are currently available for sale in Leicester.
Do commercial tenants have the same rights as private property tenants?
While the rights of commercial tenants are more limited than landlords in the residential sector, there are still rights. These are covered as part of the Landlord and Tenant Act 1954. Although this looks complicated at first glance, don’t worry as we can help break that down for you.
The Act applies where the premises is occupied for business purposes and there must be a tenancy rather than a licence. There are various exclusions such as in agricultural, mining, railway property and military establishments.
How do I obtain a commercial property mortgage?
To invest in a commercial property, you will likely need a commercial property mortgage depending on your circumstances. While it’s similar to a residential mortgage, the criteria for this kind of lending can be stricter. You might need a bigger deposit, to be a homeowner, have owned buy-to-let properties in recent years, savings in the bank and evidence of income.
How easy it is to get this sort of mortgage will also depend on how straight forward the property is and whether there are already tenants.
The cost of a commercial mortgage can also vary as there are no standard rates; instead it’s priced according to individual factors such as the sector, your experience, the property, quality of tenant and length of the lease.
It can be tricky to navigate if you’re new to the commercial property market, so feel free to give us a call for some advice.
How can Readings help?
We’re experts in all things property-related in Leicester, whether that’s buying or renting, and this includes commercial property. We can help you through every stage of the journey from deciding whether or not a commercial investment is for you, to finding a property, to maximising your chances of securing a commercial property mortgage.
We’ve got a range of commercial properties for sale and let, which you can browse through our website!
We’re also fully accredited by all the most reputable organisations including RICS, ARLA Propertymark and The Property Ombudsman to ensure that your investment is protected and you get the highest quality service.
To conclude
A commercial property investment is a big deal and not something you’ll want to take on lightly. As with all investments, it’s not free from risk, but there’s plenty you can do to mitigate the risk. With the right investment and the right support, commercial property can still be a great way to generate a good return.
A good estate agent is vital to the process. As experts in this field, we can help you gain a deeper understanding of what you’ll be letting yourself in for and how to make sure your investment is a sound one.
We can also help you through every step of your journey as a commercial property landlord to make the whole process as smooth as possible.
Interested? Give us a call to find out more today.
