Houses in Multiple Occupation and Mixed Residential & Commercial Freeholds, the Flavour of the Month

 

Houses in multiple occupation and mixed residential & commercial freeholds are two of the most sought after investments at the moment and have been for a while now. Our intrepid auctioneer decided to find out exactly why this is.

“It’s all about spreading the risk” explains Simon. One of the concerns buyers have about owning a freehold that is 100% commercially occupied is that in the event it were to become vacant, the freeholder is not only without their rental income but also has to suffer the burden of having to pay the empty rates that can amount to thousands of pounds a year. If however you building comprises of a commercial premises on the ground floor with say 3 flats above, whilst you will still be liable for the empty rates you are likely to still be receiving the rent from the residential element which will help to take the sting out of the having an empty unit. Further still, if things got really tough there is also the option of selling off one, two or indeed all of the flats and paying of any borrowings you might have on the building and thereby owning the freehold and the commercial unit free of any mortgage.

Houses in multiple occupation or HMO’S as they are more commonly known offer a similar spreading of risk insomuch as in the event your HMO consists of say 8 letting rooms, it is highly unlikely all 8 will become vacant at the same time. One or two maybe but certainly not the entire building therefore enough rent should always be able to be collected each month for the mortgage and other associated bills to be paid.

Contact Simon Caplin, Senior Auctioneer who is happy to answer any questions simoncaplin@psandb.co.uk  01273 274010