The Intermediary –- May 2026 - Flipbook - Page 47
BUY-TO-LET
Opinion
Mixed-use: A path
to stronger income
M
ixed-use or
semi-commercial
properties, and
the lending that
allows landlords
to acquire them,
is oen spoken about as if it sits on the
edge of the buy-to-let (BTL) market.
In reality, it’s far more defined than
that. For many landlords it’s becoming
a much more deliberate part of how
they build and shape their portfolios.
At the outset, the key is initially
understanding what mixeduse actually is, and where the
opportunity lies.
At Foundation, the definition is
clear. For a property to be treated
as mixed-use, both the residential
valuation and the rental income
must account for at least 60% of the
total. The remaining element can be
commercial, but the asset is firmly
residential BTL-led.
That distinction maers, because it
changes how these cases are assessed
and where they might fit within a
landlord’s wider strategy.
Residential-led opportunity
There’s a tendency to assume that
anything involving a commercial
element carries a higher level of
risk. That isn’t always the case,
particularly where the residential
side is in the majority.
Where both valuation and income
are weighted towards residential,
the property can oen behave much
more like a standard buy-to-let asset,
but with an additional commercial
income stream alongside it.
That can be aractive for a number
of reasons. The residential element
provides familiarity and consistency,
while the commercial unit can
enhance overall income. It isn’t
about replacing one with the other,
but combining the two in a way
that works.
For landlords who are already
comfortable operating in the buy-
to-let space, this creates a natural
extension rather than a step into
something completely different.
Paying more attention
The current market is pushing
landlords to think carefully about
income. Costs have risen, margins
have tightened in some areas, and
there’s a greater focus on how each
property performs within a wider
portfolio. In that context, mixed-use is
starting to draw more aention.
Properties that meet a clear
residential-led definition can oen
deliver higher rental income than a
single residential unit alone.
The presence of a commercial
tenant, particularly on a stable lease,
can add another layer of income
that supports the overall return.
This doesn’t mean every mixed-use
property will outperform standard
BTL, but it does mean there are
opportunities where the numbers
work well.
That’s why we’re seeing more
experienced landlords move in this
direction. They’re not doing so for
the sake of complexity. They’re doing
it because the income profile can
be stronger.
The role of clarity
For brokers, one of the main barriers
with mixed-use has been uncertainty.
If the definition is unclear, or if
lenders take different views on how
to assess these properties, it becomes
difficult to set expectations with
clients. Cases can stall, or fall apart
late in the process, simply because
the criteria were not fully understood
from the outset.
This is where a clear framework
makes a real difference. Seing a
defined threshold removes much
of that uncertainty. It gives brokers
a straightforward way to identify
suitable cases early and avoids time
being spent on deals that are unlikely
to proceed. It also allows lenders
GRANT HENDRY
is director of sales
at Foundation
to take a more consistent approach
to underwriting, which benefits
everyone involved.
Experience still counts
It’s important to be realistic about
who these products are for. In our
opinion, mixed-use lending, even
with a strong residential bias, isn’t
something for first-time landlords.
These are properties that require a
level of experience, both in terms of
acquisition and ongoing management.
Landlords must understand
how to deal with different tenant
types, how lease structures work
on the commercial side, and how
the property fits within their
wider portfolio.
That’s why we focus this type of
lending on slightly more established
borrowers. It’s about ensuring the
landlord has the knowledge and track
record to manage the asset effectively.
A growing part
Mixed-use isn’t a new concept, but it’s
becoming more relevant.
As landlords look for ways to
maintain and improve income, and as
portfolios become more structured,
there’s a natural shi towards
property types that can deliver more
than a single stream of rent.
Where the right parameters are
in place, mixed-use can offer that. It
sits within a defined framework, it
remains residential-led, and it gives
landlords another option when they’re
reviewing their next move.
For brokers, the opportunity is
clear. Understanding where these
cases fit, and how to assess them early,
will become increasingly important
as more clients look in this direction.
Clarity in this part of the market
isn’t just helpful. It’s what allows the
opportunity to be realised. ●
May 2026 | The Intermediary
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