Knowledge Bank’s latest round-up of commercial product search terms makes for interesting reading, as ‘mixed-use properties that are part commercial’ enters the top five for the first time since January. No movement was noted in the top three search terms for May, with semi-commercial ‘properties’, ‘maximum TV’, ‘maximum LTV’ and ‘minimum loan amount’ topping the table once again.
Meanwhile, there was no major movement whatsoever in the top three broker searchers within the bridging sector for May. Identical to April, the top searches for the month came out as regulated ‘bridging’, ‘minimum loan amount’, and maximum LTV’.
Over in the BTL arena, the top three search terms were ‘first-time landlords’, followed closely by ‘lending to limited companies’ requirement to be a homeowner’. All of them featured in the top five in April, having held their positions consistently for some time.
What is a mixed-use property?
New and established investors across the UK are increasingly setting their sights on mixed-use properties. By definition, a mixed-use property is a property that occupies two or more ‘use classes’ over different stories or areas of the structure.
For example, one of the most common mixed-use properties is a building that occupies one or more flats in its upper areas and a shop or commercial unit of some kind on the ground floor. Larger developments that comprise homes, offices, and commercial spaces in any number are also considered mixed-use properties.
The vast majority of mixed-use properties feature a vertical configuration, wherein residential units occupy certain floors and commercial/business units are based on other floors. There are exceptions to the rule where residential and commercial units may be configured horizontally, but this tends to be less commonplace.
What are the benefits of mixed-use properties?
From a resident’s perspective, living on a mixed-use property can be advantageous in many ways. Some people appreciate the proximity of their home to the amenities within the property, which could be anything from a supermarket to a gym to a bar or restaurant.
In addition, mixed-use properties are usually situated in fairly central locations and are likely to have excellent public transportation links. For those renting or buying commercial space in a mixed-use property, there is typically the benefit of high footfall in a busy urban centre.
From the investor’s viewpoint, mixed-use properties have the potential to combine the best of all worlds. Where an investor owns the property in its entirety, they can bring in potentially high rents from residential occupants and commercial tenants alike.
Savings can also be made on tax obligations, as buying a mixed-use property typically means paying stamp duty for the structure as a 100% commercial property. This can be cheaper than paying the equivalent stamp duty for a solely residential property, making for an attractive investment opportunity.
Perhaps the only downside to mixed-use property investments is the lack of specialist products available on the High Street. A standard buy-to-let mortgage from a major lender cannot be used to buy a mixed-use property, and many lenders do not issue loans or mortgages for these kinds of properties at all.
Investors must therefore consider the options available away from the High Street’s biggest banks and lenders. The UK’s independent lending sector is typically a more accessible and cost-effective option for mixed-use property purchases, with a wide variety of options available.
Examples of these include bridging finance, specialist development finance, commercial buy-to-let loans, and other types of secured business loans.
For more information on any of the above or to discuss mixed-use property finance in more detail, contact a member of the team at UK Property Finance today.