“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. Often, there may also be future development opportunities”
– Daryl Norkett – Shawbrook
Landlords are increasingly turning towards semi-commercial property when it comes to expanding their portfolios, as applications increased by 58% in H1 of this year compared to the same period in 2024. Shawbrook 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.
When it comes to the types of property landlords are investing in, retail space above flats is continuing to prove the most popular option. 69% of landlords have opted for this type of commercial property in H1, up from 60% the year prior. For smaller investors, many semi-commercial assets also come with future value generation through the use of permitted development rights to add residential units.
As well as semi-commercial property, HMOs are also increasing in popularity. HMOs 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 still remain high; and landlords continue to face a plethora of economic challenges,” comments Daryl Norkett, Director of Real Estate Proposition at Shawbrook.
“Despite this, they have once again proven themselves to be agile and adaptable, and are turning to property types which offer higher yields compared to traditional single lets.”
He adds, “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. Often, there may also be future development opportunities.”
“It is particularly encouraging to see more purchase business in the market, as it indicates committed property professionals are expanding their businesses. HMOs require more intensive management but 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. Those interested in exploring the semi-commercial and HMO markets or diversifying their portfolios should speak to a broker to better understand their options.”