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Residential vs Commercial Property: Key Differences

Different leases, risks and returns.

Residential vs Commercial Property: Key Differences Property Investment & Wealth Building

Updated October 2026 · Fraser Bond

Investing · Asset types

Residential vs commercial

Longercommercial leases
FRIrepairs
Voidslonger
VATmay apply
In short: Commercial property usually has longer leases, often on full repairing and insuring (FRI) terms where the tenant covers repairs, and higher yields, but voids can last longer and tenant businesses can fail. Residential property has shorter tenancies, stronger consumer protection for tenants and steadier demand. Commercial purchases may involve VAT and use non-residential Stamp Duty rates, and finance terms differ. Many investors hold both for diversification.

Frequently asked questions

Which yields more?

Commercial often, with different risks.

What is an FRI lease?

The tenant pays for repairs and insurance.

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