For the right investor, it is not just an alternative. It is a strategic response to market volatility, offering both reliable income potential and a hedge against rising interest rates and inflation.

Semi-commercial properties typically combine residential units with a commercial element, such as a shop, café or office. These assets often deliver more robust yields, and commercial leases tend to be longer and more secure.

On a per square foot basis, they can often outperform residential equivalents. At the same time, the residential portion provides stable income, creating a well-rounded investment vehicle.

This is a valuable feature in today’s uncertain climate.

Complexity for higher returns

These deals are rarely straightforward, but with the right lending partner to advise, brokers can build confidence and expertise quickly.

Structuring finance for semi-commercial assets calls for more than a standard mortgage approach.

Refurbishment potential is often a key part of the value-added strategy, and this is where bridging finance can prove an integral element. Bridging finance can support landlords by funding acquisitions and refurbishment works, enabling them to act decisively and enhance the value of their asset before refinancing onto a longer-term product. A partnership offering speed, flexibility and expertise is crucial here, and bridging specialists are well placed to deliver this.

For advisers, packaging up a deal means more than finding a rate. Speak to your lender early to outline the details of the deal. That includes understanding ownership structures, mapping refurbishment timelines, and most importantly, planning the exit.

The valuation and legal elements of the deal are critical and can often be the biggest obstacle to a speedy release of funds.

For example, property valuations may fall short of expectations, particularly if the asset is in a rural area where comparable properties are scarce.

Valuations can also be impacted by client over-optimism or inaccurate information, which may hinder a proper and realistic assessment, so you need to do your homework.

It is also important that your lender offers access to both desktop and AVM valuations, as well as a panel of surveyors, to support a speedy release of funds. Every aspect of the deal should be aligned to the client’s goals.

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Once again, having an early conversation with your lender can help determine whether additional security may be required and can be provided. This ensures the lender has the necessary information to appoint the most appropriate valuer for the case.

Taxing times

VAT is another important consideration that is often overlooked. Commercial property attracts VAT at 20%, and if the property is part residential, careful apportioning of value between the two elements is critical.

This should form part of your early discussions with the client. Advisers need to educate clients on the importance of seeking advice regarding VAT positioning, including HMRC regulations, the VAT registration process and filing returns.

In many cases, involving a qualified tax adviser from the outset is the safest way to protect your client and ensure a compliant transaction. It is not just about securing finance. It is about structuring the deal correctly from every angle.

Another strength of semi-commercial bridging is its flexibility.

Lenders that offer both regulated and unregulated solutions make it easier to align the finance with the client’s intentions.

Whether it is a mixed-use property that includes the client’s home or a pure investment asset, find a lender that can discuss the deal and shape funding accordingly. That is not only good practice, but also a core part of delivering on your Consumer Duty responsibilities.
Exploring a new strategy
For many clients, bridging acts as a stepping stone, especially for those new to this type of asset. It allows them to build a track record with the property, complete works that add significant value, and then refinance with stronger terms and more options on the table.

As their adviser, that gives you more scope to support their long-term goals and build a deeper, more valuable relationship.

In a recent case, we supported a broker whose client purchased semi-commercial property at auction.

The property had an empty retail unit on the ground floor and residential flats above. The client plans to transform the commercial space into a café and modernise the flats.

We provided unregulated bridging finance, which completed within three weeks to allow the purchase, followed by staged drawdowns for the refurbishment.

Twelve months later, they refinanced onto a commercial term loan at a significantly higher valuation.

In an environment where complexity is becoming the norm, semi-commercial bridging is no longer a niche.

It is a strong opportunity for advisers to broaden their offering and help clients thrive.