News

We’ve previously discussed an increased appetite for commercial and semi-commercial investment in an article during the summer of 2024. This demand continued through the second half of the year and into 2025, with further requests to support investments of this nature. This was driven through 2024 by landlords, who in some instances had only dealt in residential portfolios, diversifying into these sectors of the market. This move drove requirements for commercial and semi-commercial finance solutions and early indications for Q1 2025 suggest the pivot from residential to a higher-yielding asset class looks set to continue.

Why increased Commercial and semi-commercial finance?

With challenging debt management and sustained high outgoings for many landlords, the commercial and semi-commercial market can offer a genuine alternative as they look to balance managing debt in a high-interest-rate environment and still maintain a profitable portfolio with capital growth. It’s a switch in strategy that balances cashflow demands alongside higher-yielding portfolios. Omega saw applications rising through 2024 significantly on semi-commercial purchases and similar figures for commercial properties. The number of enquiries received remains at all time high, the shift or trend was in the property types.

Resilience through diversification

We’re hearing from wealth managers, brokers and IFAs we partner with; landlords are continuing to adapt and develop strategies to meet the economic conditions. It’s a response that ensures they remain agile, flexible and resilient in the face of high interest rates impacting cash flow. This reaction to the current high-interest-rate environment is a strategic move that ensures long-term stability and continued returns.

Our introducing partners inform us that competition for residential properties is driving prices higher especially for those assets subject to the SDLT reduction due to end imminently, and compressing yields. Commercial and semi-commercial properties consequently offer a more attractive proposition to many, especially properties that blend residential, office, and retail uses and can be adapted for mixed-use purposes.

With the evolution of the high street and a reshaping of the retail landscape, it seems likely we will continue to see innovative uses of commercial spaces and a rise in logistics hubs also shifting property uses. Multi-purpose or re-purposing of commercial space has certainly been the subject of many forward looking economist projections.

What solutions can we offer?

• Bridging finance (including Regulated and Investment)
• Structured Short- and Medium-Term Finance
• Property Investment of all kinds across Commercial, Mixed-Use and specialist Residential
• Trading Business & Owner occupied mortgages
• Development Finance including Refurbishment & Conversion
• Pension lead enquiries
• Secured loans

SONIA and Uncertain base rates

We don’t have a crystal ball as to where rates will move, however the general feeling in the market is a base rate reduction is still expected at some point this year. The markets are also closely watching the Sterling Overnight Index Average (SONIA) which was set at 4.7% mid-month. Term rates have certainly moved over the last couple of months, many investors deciding they can’t wait longer for rates to come down, given suggestions the reduction may not be as significant as previously thought. Many investors now deciding the time is right to progress with new purchases or portfolio refinances.

This is coupled with continued innovation in the market, lenders expanding their offering, also diversifying their product ranges to support the growing needs of their clients, as both requirements and strategies continue to be more nuanced.

Omega operate as a whole of market broker which means we are able to access terms, lenders and support for our clients across their growing needs, access reducing rates where possible and continue to deliver help and advice to meet more complex requirements.

Lender Expands Product Range

To further evidence this, one lender has recently launched two new product ranges aimed to support clients adding value to assets or residential landlords diversifying their portfolios into semi-commercial / mixed-use assets.

Refurbishment Facility

75% against purchase price / day one valuation + 100% of the cost of works

Medium term finance for semi-commercial / mixed-use assets

Available to: UK based and Offshore Limited companies and Investors, First Time Landlords and Foreign Nationals.

70% LTV            6.99% 3-year Fixed Rate             3 year Interest Only Term