Landlords eyeing up commercial property.
Landlords are increasingly favouring semi-commercial property when it comes to expanding their portfolios.
Shawbrook says applications increased by 58% in H1 of this year compared to the same period in 2024. The bank has also seen a 32% year-on-year increase in applications for new purchases in H1, compared to a 24% increase over the same period between 2023 and 2024.
Retail space beneath flats continues to prove the most popular option, with nearly seven in 10 investors (69%) choosing this type of commercial property in H1, up from 60% a year ago.
The survey also found HMOs are growing in popularity and accounted for 26% of the bank’s buy-to-let business — a slight increase from 25% in H1 2024.
Our senior commercial agent, Ben Maiden, said there were many benefits for landlords considering a shift.
He said, “Landlords are looking at commercial property for a variety of different reasons. Firstly, there is the potential for higher returns. We’re primarily operating in markets where yields are higher than in residential markets. However, higher yields obviously reflect higher risk, so this will take into consideration anticipated void periods and the length of marketing campaigns needed to secure a tenant in the future.
“Commercial leases are also much more straightforward to manage when it comes to non-renewal, eviction or lease terms.
“Reimbursement of costs is another major factor. Whilst residential landlords have to cover many of the tenants’ costs, commercial landlords, depending on the areas being let, can relinquish responsibility for much of the maintenance, taxes and insurances (building insurance is taken out by the landlord and recharged to the tenant).”
If any of our landlords would like advice or support with their portfolio, or are thinking of switching to commercial, please do get in touch with our teams - they’ll be glad to help.