This page is for investors and owner-occupiers looking to buy or refinance a property that has both a commercial and a residential part — the classic example being a shop or office with one or more flats above. If you have searched for a "semi-commercial mortgage" or a "mixed-use mortgage" and found that a standard residential or buy-to-let lender will not look at it, you are in the right place.
Working across more than 135 lenders, Propertyze approaches these cases criteria-first: we work out who will actually lend on your specific mix of commercial and residential use, then present the case correctly the first time — covering both the trading or commercial side and the residential rental side so the lender sees the full picture rather than rejecting it on a technicality.
Key facts at a glance
- What it is: A semi-commercial (or mixed-use) property is a single property containing both a commercial element and a residential element — for example a retail unit, restaurant or office with self-contained flats above.
- How it is treated: It is assessed as commercial / semi-commercial lending, not as a standard residential mortgage or a pure buy-to-let, because part of the security is commercial.
- Both elements matter: Lenders look at the commercial side (the tenant, the lease and the covenant) and the residential side (the rental income) together when deciding terms.
- Leverage: Loan-to-value is typically lower than for pure residential buy-to-let — as a general guide often in the region of 70 to 75 percent, though this varies considerably by lender, property type and the strength of the income.
- SDLT angle: Genuinely mixed-use property can fall under the non-residential SDLT rates rather than the residential rates, which can be lower and avoid the additional-dwellings surcharge — but this must be confirmed with a solicitor or tax adviser (see below).
- Ownership: Both owner-occupiers (trading from the commercial unit) and investors (letting both parts) can be funded, but the cases are assessed differently.
- Regulation: Semi-commercial and commercial mortgages are generally not regulated by the FCA. (Where a property is more than 40 percent residential and the borrower occupies part as their home, the position can differ — we will confirm the regulatory treatment for your specific case.)
What counts as semi-commercial or mixed-use
A property is semi-commercial when a single title — or a connected pair of titles bought together — carries both commercial and residential use. The textbook case is a shop, office, restaurant, pub or salon at street level with one or more flats above. Other examples include a guesthouse with an owner's flat, a building with ground-floor offices and upper-floor residential, or a yard with a workshop and a dwelling.
The key point is that the property is not wholly residential and not wholly commercial. That mix is exactly why high-street residential and buy-to-let lenders tend to decline it: their products are built for one use or the other, and the commercial element sits outside their criteria. A semi-commercial lender, by contrast, is set up to underwrite both parts of the building at once. The proportion of commercial to residential floor area or value often drives which lenders will consider the case and on what terms — a property that is mostly residential with a small commercial unit will look very different to a lender than one that is mostly retail with a single flat above.
How lenders assess a semi-commercial case
Lenders underwrite both halves of the building and then look at the whole.
On the commercial side, they assess the strength and security of the income: who the tenant is, the length and terms of the lease, any break clauses, the quality of the covenant (how financially sound the tenant is), and whether the unit is easy to re-let if it falls vacant. A long lease to a strong tenant supports better terms than a short lease to a weak one or a unit let on a rolling basis.
On the residential side, they assess the rental income from the flat or flats in much the same way a buy-to-let lender would — looking at the achievable rent and applying their own rental cover test.
The two are then weighed together against the loan. Because part of the security is commercial — generally seen as carrying more risk and less liquidity than a plain residential flat — leverage tends to sit below pure buy-to-let levels, often in the region of 70 to 75 percent loan-to-value as a general guide, though the exact figure varies by lender, the commercial-to-residential split, the property type and the income. Lenders will also weigh the borrower's experience, the location, the condition of both parts of the building, and any vacancy. There is no single market rate or universal LTV ceiling; the right structure depends on the case.
The SDLT mixed-use point — confirm it with an adviser
Stamp Duty Land Tax (in England and Northern Ireland) is charged differently on residential and non-residential property. A genuinely mixed-use property can fall under the non-residential SDLT rates rather than the residential bands, which can mean a lower bill and — importantly — sidesteps the additional-dwellings surcharge that applies to residential investment and second homes. That surcharge is a meaningful cost: on residential purchases of £40,000 or more it currently adds 5 percentage points on top of each standard residential band, and it applies to companies as well as individuals. Avoiding it on a genuinely mixed-use purchase can change the economics of a deal.
However, this is an area HMRC scrutinises closely. Whether a property genuinely qualifies as mixed-use — rather than being residential with an incidental or token commercial element — turns on the specific facts, and getting it wrong can lead to an unexpected SDLT bill later. This is a tax matter, not a mortgage one. You should confirm the SDLT treatment of your purchase with a solicitor or a qualified tax adviser before you rely on it. We can structure the finance around either outcome, but the SDLT position itself must be signed off by a professional adviser, and the figures above are general illustrations of the regime rather than advice on your transaction.
Owner-occupier versus investment cases
The same building can be financed in two quite different ways depending on who is using it.
An owner-occupier trades from the commercial unit — the baker who lives or lets above their own shop, the practitioner running a clinic with a flat over it. Here lenders look at the trading business behind the commercial element: its accounts, its affordability and its track record, alongside any residential rental. These cases can sometimes be considered on a more bespoke basis because the borrower's own business supports the debt.
An investor lets both parts to third parties and is buying for income and capital growth. Here the focus is squarely on the rent roll from both elements, the quality of the leases, and rental cover. Investor cases are also where the SPV and portfolio questions usually arise.
The two routes have different lenders, different documentation and different affordability tests, so identifying which one you are at the outset shapes the entire approach.
Why a specialist broker helps
Semi-commercial lending is a smaller, more fragmented market than residential mortgages, and criteria differ sharply from one lender to the next — on the acceptable commercial-to-residential split, on lease length, on tenant covenant, on whether a vacant unit is acceptable, and on whether an SPV or trading company can hold the asset. A case that is an automatic decline at one lender is straightforward at another.
A specialist broker's value is in knowing, before any application goes in, which lenders fit your specific mix and how to present both the commercial and residential elements so the underwriter sees a fundable deal. Working across more than 135 lenders, we narrow the field to the realistic options, package the case once and correctly, and manage it through to completion — saving you the wasted applications and credit-search footprints that come from approaching the wrong lenders.
Common complications we handle
- A vacant commercial unit at the time of purchase or refinance, where there is no current tenant or trading income from the commercial part.
- A short or unusual lease on the commercial element, or a tenant on a rolling or licence arrangement rather than a formal lease.
- An awkward commercial-to-residential split — for example mostly retail with a single flat, which narrows the lender pool considerably.
- Specialist commercial use such as food and drink, hot-food takeaways, salons or care-related uses, which some lenders restrict.
- An owner-occupier whose trading accounts are limited, recently changed or not yet showing a full year.
- An SPV or trading limited company as borrower, where the lender's company and director requirements apply.
- A property needing works before it is lettable or before the commercial unit can be brought back into use, which may point toward bridging first and a refinance later.
The process
- Initial conversation — we talk through the property, the commercial-to-residential split, the leases or trading position, and whether you are an owner-occupier or an investor.
- Lender matching — we identify which of the more than 135 lenders on our panel realistically fit your case and likely terms.
- Decision in principle — we approach the best-fit lender(s) and obtain an indicative decision before you commit to the costs of a full application.
- Full application and valuation — we package both the commercial and residential elements, submit the application and manage the valuation, which for semi-commercial property is usually a commercial-style inspection.
- Through to completion — we liaise with the lender, the valuer and the solicitors, keeping the case moving to drawdown.
As a general guide, you should expect to provide identification, proof of the rental income and leases, details of any commercial tenant, and — for owner-occupiers — trading accounts or business records. Timescales vary with the lender, the property and the conveyancing, and semi-commercial valuations can take longer than a standard residential one.
Frequently asked questions
What is a semi-commercial mortgage? It is a mortgage on a single property that has both a commercial part and a residential part — typically a shop or office with flats above. Because part of the security is commercial, it is underwritten as semi-commercial rather than as a residential or buy-to-let mortgage.
What LTV can I get on a semi-commercial property? As a general guide, leverage often sits in the region of 70 to 75 percent loan-to-value, lower than pure residential buy-to-let, because the commercial element is seen as carrying more risk. The actual figure depends on the lender, the commercial-to-residential split, the property and the income, so it is best assessed case by case.
What about Stamp Duty on a mixed-use property? A genuinely mixed-use property can fall under the non-residential SDLT rates rather than the residential rates, which can be lower and avoid the additional-dwellings surcharge. HMRC scrutinises this closely, so you should confirm the position with a solicitor or tax adviser before relying on it — it is a tax matter rather than a mortgage one.
Can an SPV or limited company hold a semi-commercial property? Yes, many semi-commercial lenders will lend to a special purpose vehicle (SPV) or trading limited company, subject to their company structure, director and personal-guarantee requirements. We will match your case to lenders comfortable with your chosen ownership structure.
Can I get a mortgage if the commercial unit is vacant? Often yes, though a vacant commercial unit narrows the lender pool and can affect the terms, because the lender cannot rely on the commercial income. We will identify lenders comfortable with vacancy and structure the case — sometimes alongside bridging finance — around bringing the unit back into use.
Speak to a specialist
If you are buying or refinancing a shop, office or other property with a residential element, we will tell you honestly who is likely to lend, on what sort of terms, and how best to present the case. Call 020 7126 8574 or request a call back, and we will reply within one working day.
Your property may be repossessed if you do not keep up repayments on a mortgage secured on it.
Commercial and semi-commercial mortgages are not regulated by the Financial Conduct Authority. Propertyze is a trading style of City Finance Brokers Ltd, authorised and regulated by the Financial Conduct Authority (FCA No. 766295). We conduct both regulated and unregulated business, so not all products provided through us are regulated by the FCA.