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14/7/25 8:13 pm
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Landlords are increasingly turning towards semi-commercial property to expand their portfolios.
Shawbrook reports that applications (for both purchases and refinances) increased by 58% in H1 of this year compared to the same period in 2024. It has also seen a 32% increase in applications for new purchase applications in H1 year-on-year, compared to a 24% increase in the same period between 2023-2024.
Retail space above flats is continuing to prove the most popular option with 69% of landlords who opted for this type of commercial property in H1, up from 60% the year before. For smaller investors, many semi-commercial assets also come with a future value generation through permitted development rights to add residential units.
HMOs are also increasing in popularity and made up 26% of Shawbrook’s buy-to-let business, a slight increase from 25% in H1 2024.
While interest rates are more stable, they remain high, while landlords continue to face a plethora of economic challenges, according to Daryl Norkett, director of real estate proposition (pictured). Despite this, they’ve proven themselves to be adaptable, and are turning to property types which offer higher yields compared to traditional single lets.
“It is no surprise that semi-commercial properties are in demand, largely thanks to the benefit of having both commercial and residential space, meaning that landlords can enjoy higher yields with more diverse income streams,” Norkett explains. “Often, there may also be future development opportunities.”
While HMOs require more intensive management, they continue to offer good income when well run and also give landlords the ability to pass through increases in market rents more quickly as tenants more regularly turnover, he adds.
“It is particularly encouraging to see more purchase business in the market as it indicates committed property professionals are expanding their businesses.”
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