Buy-to-let landlords who want to diversify their property portfolio are attracted to semi-commercial property, a MortgageStrategy.co.uk article from December 2017 has suggested.
Semi-commercial property is mixed-use property with both commercial and residential tenants. These include flats above shops and garages, pubs and hotels.
Some commercial property owners have converted part of their property for residential use. Most councils will be happy to provide planning permission for conversions as it helps fulfil their local housing targets. Councils are particularly in favour of residential conversions on brownfield sites.
Buy-to-let landlords often favour semi-commercial property as they still have a residential element. Many lenders are experienced in semi-commercial property and provide commercial mortgages for investors.
Buy-to-let landlords have faced cuts to mortgage interest tax relief on purely residential properties, but these have not been applied to semi-commercial properties. Stamp duty at 2% on semi-commercial property is less than charged for purely residential property.
When applying for a commercial loan for semi-commercial property, lenders may apply affordability tests that are less strict than for residential properties. If the lender is convinced that the borrower knows what they are doing and has a sound business plan, they are likely to treat a loan application more favourably.
Though high street lenders provide commercial mortgages for semi-commercial property, they will rarely provide more than 65% loan to value. Specialist lenders will often offer 75% loan to value loans, and some offer interest only commercial mortgages. A commercial mortgage broker will be able to provide guidance and find the best suited commercial mortgage deals.