Semi-commercial and mixed-use property mortgages
A shop with flats above, a pub with rooms, an office with a caretaker's flat. Mixed-use property has tax and lending advantages that pull in a lot of residential landlords. Here is how it works and what to watch.
What counts as semi-commercial
A single title with both a commercial element (shop, office, restaurant, workshop) and a residential element (one or more flats). Lenders usually want the commercial part to be a meaningful share of value, often 30% or more, for it to count as semi-commercial rather than a residential property with a shop attached.
Why landlords like it
- Stamp duty. Mixed-use property is taxed at non-residential rates: 0% to £150,000, 2% to £250,000, 5% above in England and Northern Ireland. No 5% additional-property surcharge. On a £400,000 purchase that is £9,500 rather than £30,000+ for a residential buy-to-let.
- No buy-to-let stress test. Semi-commercial lending is tested on total rent versus interest, with the commercial income counted, rather than the residential BTL rules.
- Two income streams. If the shop is empty the flats still pay, and vice versa.
- Yields of 7% to 10% are common, above pure residential.
What lenders want
- Loan-to-value up to 70% to 75%.
- Interest cover on the total rent of 125% to 145% at a stress rate; some lenders discount the commercial rent if the lease is short.
- The commercial lease: length, tenant, repairing terms. A vacant shop at purchase is workable with some lenders at a lower LTV.
- The flats: separate access is a plus; a lender may decline if the only way into the flat is through the shop.
- Landlord experience helps; first-time landlords pay more.
What to watch
- Planning. Check the flats are lawful residential use (not an unauthorised conversion of storage).
- EPCs. Both parts need to meet the minimum standard for letting (E, currently).
- If you will live in the flat yourself and it is more than 40% of the property, the loan becomes a regulated mortgage contract and needs an FCA-authorised adviser and a different set of lenders.
- Restaurants and takeaways below flats are priced higher (fire, smell, noise, saleability).
A note on the numbers. Rates, loan-to-value limits, fees and criteria are typical figures at the time of writing (2026). Commercial lending is priced case by case, so your own terms depend on the property, the business, the tenant and you. This is information, not advice, and not an offer of finance.
Quick answers
Is a house converted to a shop downstairs still semi-commercial?
If the shop has lawful commercial use and is a meaningful share of the value, yes. If it is a token office in a house, lenders will treat it as residential.
Can I get it in a limited company?
Yes; most semi-commercial lenders lend to SPVs, with personal guarantees from directors.
Ready to talk to someone who can actually arrange it?
Tell us about the property and the business, and a commercial finance adviser will come back with which lenders fit, what rate to expect and what they'll want to see. No fee for the conversation, no obligation.