There’s always a huge amount of talk around the ‘next big thing’ in any business sector. This has also been evident across the mortgage industry, although it seems that such discussions always tend to end up focusing on differing elements within the specialist lending marketplace. At least over the past 10 to 20 years anyway.
Inevitably, the changing face of the UK economy continues to influence these debates and the direction being taken by potential homebuyers, existing homeowners and especially when it comes to the attitudes and application of property professionals.
I think it’s fair to say that the more experienced property professionals are the ones in this trio who have been able to adapt better, faster and more rationally to the higher rate interest environment. Largely due to this accumulated knowledge and having had to previously overcome an array of differing obstacles.
It’s this accumulated knowledge which arms them with the ability, capacity and commitment to identify existing opportunities within their wheelhouse and the confidence to explore potential new areas and asset classes in order to safeguard and grow their businesses. Although, they have required plenty of support from a finance and advice perspective along the way.
One of these areas we continue to see an increasing number of these property professionals focusing on in today’s market is semi-commercial.
These are property types which tend to offer higher rental yields than traditional single lets and have become increasingly attractive due to the additional benefit of having a mix of income streams rather than a reliance on just one. This vital combination is a shining example of why demand is rising and this is a factor which was demonstrated in internal data from Shawbrook suggesting that semi-commercial applications almost doubling in 2024 compared to 2023
Despite being not even 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 39% looking towards the region in 2024 compared to 27% in 2023. Meanwhile, 60% sought retail spaces with flats above.
Many of these assets also come with future value generation potential through the use of permitted development rights to add residential units. This further increases their appeal in a challenging economic climate which is placing an even greater spotlight on the advice process across financial services.
Within this, the value attached to advice around specialist property types and more complex borrowing scenarios is fully apparent. From a specialist packaging standpoint, we are experiencing heightened demand from an array of introducers in terms of providing additional support and expertise to deliver a complex set of property-related solutions for their clients.
Whether the increase in demand for semi-commercial properties can be classed as a certified trend remains to be seen in a market full of unknowns. However, it’s certainly an area worth following in H2 2024 and, as suggested in the commentary around the figures from Shawbrook, those interested in exploring the semi-commercial market or diversifying their portfolios should speak to a broker to better understand their options. And those brokers who need additional support in accessing the most appropriate semi-commercial solution for such clients would do well to turn to a trusted packaging partner who has the ability to add real value in any commercial transaction.
Donna Francis, Managing Director at Envelop
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