February 2024

New lenders are shaking up semi-commericial

A growing number of investors are diversifying their residential portfolios through expansion into semi-commercial property and the lender market is responding to this demand.

There are now two or three buy-to-let lenders that are able to lend on residential property with an element of commercial given certain parameters.

With these lenders at least 60% of the block value, either rental or capital, should be residential.

The arrival of these lenders is creating diversity, challenging existing players and presenting new opportunities for cleints.

For example, they are able to lend to investors who want to rent part of the property to themselves and it’s even possible to secure finance on care homes using this approach.

We recently completed a case for a client on a care home with accommodation for 6 vulnerable residents looked after by three carers each day. Ordinarily, this may be considered to be a case for a specialist commercial lender, but we were able to place it with a buy-to-let lender on the bases of it being a HMO. Consequently, we were able to secure a lower rate. Beneficial, not just because it is a cheaper product, but the minimum loan available is obviously a calculation based on the achievable rental vale and the rate, so a lower rate enables investors access to more gearing, and investors still want leverage.

As with any type of specialist mortgage, knowing the right lender with which to place a case based on the circumstances of the client and the security of the appetite of the lender is only half the battle. A strong working relationship with a lender is also an important element of successful application and can often make a vital difference in getting the case over the line, particularly when there are considerations that fall within the grey areas of lender’s criteria.

Meaningful relationships like this can take years to develop. By partnering with Sirius, you can utilise our strong relationships and be confident that you are delivering the best possible outcomes for yoru cleints.

Dak Lam, Senior Associate Investment Finance

For intermediaries only.

Your home may be repossessed if you do not keep up repayments on your mortgage or a loan secured against it.

The Financial Conduct Authority does not regulate some aspects of corporate financial planning, property investment or buy to let lending.