West Midlands commercial property prices set to rise says bank

PRICES for Buy to Let and commercial property in the West Midlands look set to rise in the next five years, according to a new study.

The conclusion follows a poll of brokers, surveyors, accountants and lawyers in the region conducted by challenger bank Cambridge & Counties.

Asked about Buy to Let residential property values, the majority of those polled said they expected prices to remain roughly flat in the next 12 months. A third predict a significant rise.

Over the next five years, the majority expect an increase in prices and more than a quarter are anticipating values to rise by at least 10%.

Looking at commercial properties, the picture is even more positive. No-one is expecting prices to fall in the next 12 months and more than 80% per cent expect a rise. The five-year outlook sees a third expecting at least a 10%.

George Osborne used the Budget to announce changes to Stamp Duty Land Tax for commercial property, with almost half of buyers who pay the tax facing lower bills. Meanwhile, 9% – those paying more than £1.05m for a property – will pay more.

Lisa Williams, managing director of property finance specialists Keys (UK), based in Coventry, said: “I think we will see an increased interest in commercial property investment over the coming years. All types of investor still need somewhere to put their money and after the Government’s attack on residential landlords they will look for other havens.

“Investors will retain the mortgage interest relief on commercial property, Stamp Duty Land Tax and Corporate Gains Tax is unchanged on commercial and as such this is likely to be where many put their money.

“Whether this can be supported by the demand for tenants, however, is another matter. As I’ve always said a tenant who wants a three bed house will compromise with a two bed, but a tenant who needs an office can’t compromise with a factory.”

The brokers and other advisers were also asked about how easy it will be to access finance for the businesses they work for.

A majority expect the situation to improve, but sentiment is warmer for the next six to 12 months than for the longer term. Their customers are largely confident about their business prospects.

Neil Reddington, Cambridge & Counties director of business development for the West Midlands, said: “We’ve come to the heart of the West Midlands to lend money to investors and businesses which own their premises, so it is very encouraging that finance and property professionals in the region have confidence in the market.”

The survey also asked which city, Birmingham or London, would benefit more from the HS2 railway – the response was 2:1 in favour of Birmingham.