The Intermediary – July 2026 - Flipbook - Page 56
SPECIALIST FINANCE
Opinion
Taking another look
at semi-commercial
S
emi-commercial property
has never sat in the most
fashionable corner of the
market. Many investors
gravitated towards
more straightforward
residential buy-to-let (BTL)
opportunities, oen viewing
semi-commercial assets as
unnecessarily complex.
Yet, I think that perception
is beginning to change. Recent
months have brought no shortage of
uncertainty for property investors.
The introduction of the Renters’
Rights Act and continued geopolitical
tensions have both added fresh
considerations for landlords.
I think many investors are now
paying much closer aention to the
strength and reliability of income
than they were a few years ago. And
that goes some way to explaining why
more investors are taking another
look at semi-commercial property.
According to UK Finance, average
rental yields increased from 6.99%
to 7.18% during 2025. As investors
place greater value on dependable
income, semi-commercial assets can
offer something that many traditional
buy-to-let properties cannot: a broader
income profile generated from both
residential and commercial elements
within the same asset.
That certainly does not eliminate
risk, but it can reduce reliance on a
single source of revenue. For investors
scrutinising income more closely, that
can be an aractive proposition.
Rise of the professional
I also think this reflects the changing
make-up of the landlord market.
Many of the investors active in
today’s market are willing to spend
more time assessing an opportunity
if they believe the underlying
fundamentals are strong. Rather
than focusing solely on simplicity,
they are oen more interested
in understanding how an asset is
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The Intermediary | July 2026
likely to perform through different
market conditions and over longer
investment horizons.
Semi-commercial property is a
good example. Assets that may once
have been dismissed as unnecessarily
complex are now being assessed
through a different lens. Because
these properties occupy the space
between traditional residential and
commercial investment, they are not
suitable for conventional lending or
investment models.
Yet that same characteristic can
create opportunities for investors
willing to take a more considered view
of an asset’s income profile and longterm performance.
Pricing and practicality
Of course, identifying an opportunity
is only part of the equation.
Securing the right funding remains
equally important.
Semi-commercial transactions
oen involve multiple occupiers,
varied income streams and a greater
degree of complexity than a standard
buy-to-let purchase. Naturally, pricing
remains an important consideration,
particularly in a market where
investors are paying close aention to
costs and returns.
However, brokers and investors are
also focused on the strength of the
income profile, the quality of the asset
and whether the overall structure of
the transaction supports their longerterm objectives.
That demand is something we are
seeing first hand at London Credit.
Recently, we reduced rates across our
semi-commercial bridging range. Yet
while competitive pricing remains
important, many of the discussions
we are having with brokers continue
to centre on income strength,
transaction structure and the overall
strength of the proposition.
Recently, for example, we supported
a borrower with an £800,000
bridging loan secured against a semi-
MARIOS THEOPHANOUS
is credit manager
at London Credit
commercial property in Chiswick.
Despite a more complex borrowing
structure, the transaction completed
within the required timeframe and
enabled the borrower to release capital
for reinvestment.
Why now?
It would be easy to conclude
that the growing appeal of semicommercial property is simply about
diversification. I think the reality runs
deeper than that.
The investors showing the greatest
interest in these assets are oen
looking beyond short-term market
movements and focusing instead on
the sustainability of income over time.
Viewed through that lens, the
appeal of semi-commercial is easy to
understand.The asset class itself has
changed very lile. Semi-commercial
properties have existed for decades and
many of the opportunities available
today would have existed several years
ago as well.
In a market where investors are
scrutinising income more closely,
semi-commercial property has
characteristics that naturally stand
out. The combination of residential
and commercial income, the potential
for a broader revenue base and the
opportunity to look beyond more
conventional investment models
all help explain why these assets are
aracting greater aention.
For me, that is the real story. Semicommercial property is not benefiting
because it has fundamentally
changed. It is benefiting because
investor priorities have changed, and
because reliable income has become
a more important consideration
than it was during more favourable
market conditions. ●
