Guide 1 of 6 in Getting Started
What Is Commercial Property? A UK Overview
Written by Scott Jones, founder of CommercialPropertyKiln · Last updated
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Commercial property is property used for business rather than as a home. For an investor or landlord, it behaves very differently from residential, in tax, law and management.
The main asset classes
- Office: from single suites to headquarters buildings.
- Retail: shops, high-street units, retail parks and shopping centres.
- Industrial and logistics: warehouses, distribution units and light industrial. The strongest-performing sector in recent years.
- Leisure and mixed-use: pubs, gyms, hotels, and buildings combining commercial and residential.
Whichever the class, the numbers are compared on yield, and many buildings earn extra from rooftops and land: telecoms, solar and EV charging.
How it differs from residential
Commercial leases are longer and usually put repairs and insurance on the tenant, the tenant normally pays the business rates, and the tax treatment is different, from SDLT to the absence of the residential Section 24 restriction. See commercial vs residential.
Why people invest
Commercial property can offer higher yields than residential, longer secure income from established tenants, and, for a business owner, the option of owning premises through a pension. It also carries different risks, such as longer voids and tenant covenant risk.
Where to start
If you are buying, work through how to buy commercial property and the due diligence checklist.
What counts as commercial property?
Property used for business rather than as a home: offices, retail, industrial and logistics, leisure and mixed-use.
Why invest in commercial property?
It can offer higher yields than residential, longer secure income, full interest relief, and, for a business owner, the option to own premises through a pension.