Specialist finance for mixed-use properties
Semi-commercial property, also known as mixed-use property, combines residential and commercial elements within the same building. The most common example is a ground floor retail or office unit with one or more residential flats above, though the combination can take many forms.
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These properties do not fit neatly into either the residential or commercial mortgage category, which is why fewer lenders will consider them and why the assessment criteria are more involved. Getting the right lender is important, as is presenting the case clearly.
Why semi-commercial properties are treated differently
When a lender assesses a semi-commercial property, they are effectively looking at two income streams: the commercial letting income and the residential letting income. Each carries different risk characteristics. Commercial leases and tenants are assessed differently from residential tenancies, and the income reliability of each element influences the overall assessment.
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Loan to value ratios on semi-commercial properties are often lower than for pure residential or pure commercial transactions, typically in the range of 65% to 75% depending on the lender and the property mix. The assessment of the commercial element, including the quality of any existing tenancy and the type of commercial use, carries significant weight.
Types of property covered
Shops or offices with residential flats above
Guest houses and bed and breakfast properties with owner accommodation
Small commercial units combined with residential conversion
Pubs or restaurants with living accommodation attached
Properties with a mix of short-term residential lets and commercial use
What lenders look at
The split between residential and commercial floor space and income
The commercial element: type of use, quality of tenancy and lease terms
The residential element: number of units, condition and rental income
The overall loan to value against the property as a whole
The borrower: experience of managing mixed-use property, financial position and background
Whether the borrowing is personal or through a limited company
Semi-commercial property finance needs the right lender from the start. These properties do not fit neatly into standard residential or commercial criteria, so approaching lenders who are not active in this area can waste valuable time. We know which lenders understand mixed-use property and how to present the case properly.