Semi-commercial and house in multiple occupation (HMO) properties are attracting investment from professional landlords, a specialist lender has found.
According to Shawbrook’s own data, professional landlords are showing interest in these property types when expanding their portfolios. The lender noted a 58% rise in applications over the first half of the year compared to last year. Further, it saw a 32% increase in applications for new purchases in H1, compared to a 24% rise from 2023 to 2024.
Shawbrook said retail space above flats were most popular with professional landlords, with 69% choosing this property type in H1, compared to 60% a year earlier. The lender said this was attractive to smaller landlords because semi-commercial assets had the ability to add residential units in the future through permitted development rights (PDR).
Further, HMOs made up 26% of Shawbrook’s business in H1, slightly up from a quarter during the same period in 2024.
Daryl Norkett, director of real estate proposition at Shawbrook, said: “While interest rates are more stable, they still remain high, and landlords continue to face a plethora of economic challenges. Despite this, they have once again proven themselves to be agile and adaptable, and are turning to property types [that] offer higher yields compared to traditional single lets.
“It is no surprise that semi-commercial properties are in demand, largely thanks to the benefit of having both commercial and residential space, meaning that landlords can enjoy higher yields with more diverse income streams. Often, there may also be future development opportunities.”
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Norkett said it was “particularly encouraging” to see more purchase business in the market, as it “indicated committed property professionals are expanding their businesses”.
He added: “HMOs require more intensive management but continue to offer good income when well-run, and also give landlords the ability to pass through increases in market rents more quickly as tenants more regularly turnover. Those interested in exploring the semi-commercial and HMO markets or diversifying their portfolios should speak to a broker to better understand their options.”