It’s a tough time to be a landlord. The succession of changes to tax and regulation made in recent years – with the Renters’ Rights Act just the latest example – have caused many landlords to reconsider their options.
In some cases, they have left the market altogether, but in others investors are simply looking to diversify, to move beyond traditional buy-to-lets and instead add commercial and semi-commercial properties to their portfolios.
A recent study by Together highlighted this, with an 18% increase in the volume of commercial and semi-commercial properties purchased between 2022 and 2025 according to HMRC data, while Together’s own figures showed a jump of almost 10% in the number of semi-commercial and commercial mortgages written over the same period.
There are numerous tax and regulatory advantages to diversifying in this way, plus the fact that the risk is spread, since there are numerous tenants involved.
With semi-commercial in particular, landlords have the opportunity to effectively enjoy two income streams from the same space, providing security should one of the tenants fall behind.
It seems fair to expect to see further interest in this market in the years ahead from investors – there is a reason we see so many lenders entering this space currently, after all – which highlights the need for advisers to have a plan over how to deal with these cases.
THE NEW NORMAL
This may feel a little daunting for some. It’s not uncommon for advisers to have only handled traditional residential buy-to-let cases, or at most a house in multiple occupation (HMO). These have been the bread and butter for many landlords, and by extension for the advisers supporting them.
But as landlords look to more specialist and complex assets to fill out their portfolios, advisers need to diversify too. In some cases this will mean adding to their own skillset, taking the time to get to grips with some of the nuances involved with semi-commercial and commercial cases which set them apart from a regular buy-to-let deal.
This will inevitably involve a substantial outlay in terms of time and effort, though, since these cases can involve more moving parts. For advisers looking to invest in their abilities for the long-term, that outlay may be worth it, but for others it will be a different story. They may already be timepressed, and feel it’s unlikely they will see more than a handful of semi-commercial or commercial cases a year, instead preferring to explore the referral route.
There isn’t an automatic right or wrong answer here; the best option will vary between advice firms. But what’s not up for debate is the fact that advisers will need to have some sort of plan in place for tackling cases involving commercial and semi-commercial investment properties.
NETWORKS MUST STEP UP
This is also an area where networks need to do more. Too often I hear from advisers who feel their ambitions and options have been limited by their network – they feel like doors have been closed, rather than opened for them.
And if landlords are looking at more specialist properties, then appointed representatives need to have the tools at hand to support them. At Rosemount, we have put training in place alongside our partner lenders, aimed at supporting advisers keen to move into this area, while our setup has attracted some advisers who are already specialists in commercial lending but who want the backing of a network rather than operating as a directly authorised business.
And there are also referral opportunities to other advisers within the network if it’s not something the individual adviser feels comfortable with.
Just as advisers need to have a plan, so do networks. We can’t bury our heads in the sand; if we are truly passionate about delivering great advice to our clients, then we need to have a full range of options open to our members.
Property investment is evolving, and the advisers and networks who fail to adapt alongside that will be left behind.
