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What is a semi-commercial property?


More and more landlords are turning to semi-commercial properties because of the reasonable prices available along with better yields following updates to tax and regulatory changes in the sector, but what exactly are semi-commercial properties and why are they so popular?

As one of the UK’s leading commercial mortgage brokers, FC Funding are on hand to explain to you all about semi-commercial properties, why they’re so popular and how we can find the right mortgage for your property.

Contact us today to discuss your commercial property finance options.

How do you define a semi-commercial property?

A semi-commercial property is one that consists of both a commercial and residential element. Common examples are off licenses or newsagents which have a flat upstairs and bed and breakfasts. Essentially, semi-properties include any business premises with accommodation on site.

How do you classify a semi-commercial property?

As a general rule, properties are considered semi-commercial if at least 40% of the premises is residential. So, say if you only use a spare bedroom for your hairdresser salon, most lenders would class this as a residential property and not semi-commercial.

What are the key features of a semi-commercial property?

The key factors that affect the attractiveness of a semi-commercial property are:

Property yields

Many semi-commercial properties are yield-driven on:

  • The commercial aspect of the ground floor, which is based on the strength of the occupier
  • The residential aspect, which is based on the prices of other residential properties in the area

Finance options and tax changes

There are several options you can look into for your semi-commercial property. One option is to split the commercial and residential aspects into separate titles, meaning the value of separate units is higher than the value of the building as a whole on one title.

Be aware that there are tax implications when looking at the residential component separately, so it’s best to consult a tax adviser to avoid any confusion.

Why are semi-commercial properties becoming so popular?

Semi-commercials are growing in popularity for a number of reasons, including how:

Yields are relatively higher

Typically, semi-commercial properties return relatively higher yields than traditional single buy-to-lets.

You can split your rental income between multiple tenants

By opting to bring in multiple tenants, you reduce the likelihood of a void period whereby no one is staying in the accommodation. This increases the security of the income produced from within your semi-commercial property.

The tenant is responsible for maintaining the premises

On the commercial element of the property landlords tend to pass the responsibility for any costs associated with repairs, renewals and commercial insurance to the tenant. This removes the unpredictability of any unexpected repair bills suddenly appearing.

Stamp duty exemption

Semi-commercial or mixed-used properties are exempt from the 3% stamp duty surcharge that applies to residential properties. This can be a very significant saving, especially if you’re look to invest in a higher value location.

What mortgage do I need for a semi-commercial property?

Semi-commercial or mixed-use mortgages are designed specifically for semi-commercial properties. FC funding are specialists in all aspects of commercial property finance, and can work with you to get you the best deal for your business venture.

FC Funding are specialists in commercial property finance

FC Funding are experts in commercial mortgages, buy to let mortgages, bridging loans and investment mortgages, and have years of experience in all areas of commercial lending and facilities.

Thanks to our extensive knowledge of the financial sector, we can help you evaluate the semi-commercial mortgage options available to you, enabling you to choose the most suitable product for your circumstances.

For more information on how we can help find you the best deal, contact us by calling our friendly team on 01202 937880.

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