Director says landlords are getting creative, and commercial is where the confidence is
The commercial mortgage market is shifting. As smaller landlords feel the squeeze of higher rates and tightening yields, a growing number of property investors are pivoting to commercial and semi-commercial lending, not as a last resort, but as a deliberate strategic choice.
Sam Rose (pictured top), co-founder and director of TR Financial and TR Commercial Finance, told Mortgage Introducer that shift is visible on the ground, and the opportunity it creates for well-prepared brokers is significant.
Rose founded TR Financial with his business partner Gideon Tiano during the Covid-19 pandemic, building the firm from scratch without an inherited client book. Around three years ago, enquiries on the more complex end of property finance prompted the pair to establish TR Commercial Finance, which now handles bridging, commercial mortgages, and other unregulated lending.
Stay ahead of the UK mortgage market. Subscribe to the Mortgage Introducer daily newsletter for broker news, rate updates, and the industry latest delivered to your inbox every morning.
A market in flux – but still moving
From that vantage point, Rose described a market that has had to adapt rather than simply contract. "We've noticed in the recent rate hikes that buy-to-let and commercial rates haven't actually changed that much, which has kept business flowing," he said. But the picture beneath that headline is more nuanced.
Smaller landlords coming off long-term fixed deals are facing an uncomfortable reality. "They've come off a five-year fix this year and next year, and they'll discover they're not making as much," Rose said. "And if they're a higher rate taxpayer, they're struggling even more."
The response from many investors has been to sharpen their approach. Rather than simply buying and holding, Rose is seeing landlords focus on maximising each deal – purchasing below market value, adding value through conversion or improvement, then either selling or refinancing to release capital for the next acquisition. "Maximising a deal is what's really focusing people's minds," he said.
Longer-term tenancy arrangements are also gaining traction. Rose pointed to a rise in investors seeking arrangements with local authorities or housing groups, as well as significant growth in houses in HMOs. "Things like HMOs have really kicked on in the last few years," he said. "Despite some of the overbearing licensing rules, if you're in tune with them and you know what you're getting into, something like an HMO can be quite profitable." That observation is borne out by the data. Buy-to-let yields hit a 15-year high in Q3, according to Paragon Bank, with HMOs generating an average gross yield of 8.80% – the strongest of any property type recorded.
The limited company structure has become another dominant thread. "Limited companies is the hot ticket," Rose said. "It is the way to do things." While those who already hold properties in personal names face constraints on incorporation, new buy-to-let investment is increasingly structured through limited companies from the outset – a trend building steadily since the phased removal of full mortgage interest relief for individual landlords.
Semi-commercial: crossing into new territory
It is against that backdrop that semi-commercial lending – mortgages secured against mixed-use properties where residential and commercial uses coexist within a single building – is gaining momentum. TAB’s Mixed-Use Mortgage Monitor recorded semi-commercial lending hitting £250m in Q3 2026, putting the market at an annualised run rate of £1 billion for the first time since tracking began in Q1 2025. That represents growth of 36% over that period, with 30 lenders now active in the sector and 99 dedicated products available, up 5% on the previous quarter.
Rose said the shift is clearly visible in his enquiry pipeline. “Even the sort of amusing conversations with people who would previously only talk about residential, they’re thinking, why aren’t I doing commercial or semi-commercial?” Part of the attraction is perception. Commercial property is seen by many investors as carrying fewer regulatory constraints than the residential buy-to-let sector. “Because of landlord rules on the residential side of things, people are going down the commercial route because they feel that it’s less stringent on them,” Rose said. “So we’re definitely seeing that more and more.”
The post-Covid hesitancy from lenders has also eased considerably. During and immediately after the pandemic, many pulled back from commercial entirely – the prevailing assumption being that high streets were dying and offices were emptying for good. That mood has shifted. “Lenders seem very keen to lend,” Rose said. “More and more people are looking at commercial as the future of property investment.”
Regional divergence and the case for diversification
The recovery is not uniform. Yields in London and the South East simply do not stack up the way they once did, and Rose is seeing investors look further north as a result. "There seems to be more and more investment in the north of the country, where yields are great, and there's a lot of investors going after that part of the world."
Brokers advising clients in sectors where demand is uneven – retail continues to lag well behind industrial and logistics – need to push harder on diversification. "You've got to dig deeper into the numbers to see where you're getting a route to diversify something," Rose said. That often means exploring whether a commercial asset can accommodate a residential element, increasing both its value and a lender's comfort with the deal.
Rose cited a recent case involving a semi-commercial property in Brighton where a client wanted to extend the residential element to improve profitability. "Gone are the days where you buy a property and you can just pull a bunch of money out of it," he said. "You've really got to dig down into the detail."
Warehouses and data centres are emerging as the next clear opportunity, while flats are struggling hard, with knock-on effects up the market chain. But the broader outlook, Rose argued, remains positive. "There's a huge appetite for property in this country, whatever type. Lenders want to lend still – that is very clear. And commercial seems to have a bright future ahead of it." Brokers willing to move into more complex territory will find the demand is real. "You've just got to have a good team of people around you."
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
