Repayments now often lower than rent, prompting rise in commercial purchases
Demand in the UK’s commercial property market remained largely unchanged in the second quarter of 2025, according to the latest Commercial Property Demand Index from specialist property finance expert Rangewell.
However, increased interest in owner-occupied mortgages helped underpin market stability, with more business owners choosing to purchase their premises rather than lease them.
Rangewell reported that monthly mortgage repayments are now often lower than commercial rents. This cost difference, alongside the appeal of asset control, has prompted more firms to acquire the properties they operate from.
The firm highlighted two primary reasons for this shift: the potential to reduce monthly outgoings and the ability for businesses to gain long-term security by owning their key operational asset.
Rangewell’s research, based on the share of commercial property listings sold during Q2, showed that retail space led the market, accounting for 27.8% of demand. Offices followed at 27.3%, with industrial and warehouse sites at 26.2%.
While overall demand across the commercial sector was broadly consistent with Q1, the leisure and hospitality segment saw a modest increase, with demand rising by 0.7%. Sub-sectors such as specialist care, dental practices and children’s nurseries also saw a marked uptick in owner-occupier interest.
Despite the stable headline figures, Rangewell noted a rise in enquiries and completed transactions for owner-occupied commercial mortgages. The trend reflects a broader shift among established firms aiming to reduce exposure to rising rents and secure long-term operating bases.
“When business owners realise that mortgage payments can be up to 37% less than rental payments – and they’re building equity value in their property at the same time, the case for buying becomes obvious,” said Alasdair McPherson, commercial property expert at Rangewell. “It’s astonishing how often an owner-occupier can buy their freehold property and still pay less each month than they do leasing the same building.”
He added that while demand remains strong for retail and office spaces, the owner-occupied segment is driving much of the real activity behind the scenes.
“From our perspective, the commercial owner-occupied sector has never been busier and lenders are lining up to grow their share in what’s fast becoming the most competitive segment in the sector.”
Rangewell noted that tailored commercial mortgage products are helping more businesses make strategic investments in their premises, with banks showing a growing appetite to support this shift.
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.
