More landlords investing in semi-commercial properties

Landlords are increasingly turning towards semi-commercial property, with applications almost doubling in 2024 compared to 2023, according to the latest internal data from Shawbrook.

Despite only being halfway through the year, Shawbrook revealed that 2024 has already seen 24% of semi-commercial applications for new purchases compared to just 13% in 2023. This comes as the market has become less volatile in recent months, giving rise to investors expanding portfolios with higher yielding assets.

The South East, in particular, has been an attractive target for investors with two-fifths (39%) in 2024 looking towards the region compared to a quarter (27%) in 2023, according to Shawbrook’s application data.

Looking further into the kinds of properties landlords have invested in, 60% sought retail spaces with flats above. For small investors, many of these assets also come with future value generation potential through the use of permitted development rights to add residential units.

Daryl Norkett, director of real estate proposition at Shawbrook, commented: “Property investors are adapting to a higher interest rate environment with portfolio landlords taking the opportunity to grow their businesses with a wider range of assets. We’re already seeing this in the applications we’ve been receiving recently, with investors looking towards property types like HMOs, social housing, and semi-commercial properties that tend to offer higher rental yields than traditional single lets.

“These opportunities are property specific but can be very attractive to investors. Semi-commercial properties in particular have the added benefit of having both commercial and residential space, meaning that landlords can enjoy higher yields with a mix of income streams."