Happy Friday everyone.  Sadly back to the UK weather – it really was very lovely working from a holiday apartment.

The commercial sector has been hit much harder due to COVID.  To be honest, due to the increase in online purchasing, the larger retailers were already having issues, but COVID is definitely nailing a few extra nails in.

So what is available and how has the market changed with regard to lender appetite?

Fully commercial

Well owner occupied, whether fully or on an opco/propco basis is almost impossible.  Lenders still deeming this as very high risk; that said I think the door is just latched, rather than locked.

Semi commercial

This is still a popular area and lenders are offering a number of products up to 75% LTV. Each lender has its own appetite regarding the commercial covenant, but the important part to check is how they will calculate the rent. As always there are a number of ways to skin the cat; For example only allowing the residential rent to raise the funds; or allowing a particular percentage split of commercial to residential.  Please make sure you have your sq footage figures ready as well as the value splits in advance of spending on valuations, just to be sure it works.

Commercial to residential conversions

This is probably the biggest area for investors, due to a number of properties falling into the Permitted Development area.  This has been further relaxed recently, providing many more opportunities. We have lenders that will lend against the property with a commercial usage, ie. even without full planning coming through.  Each council has its own way and timescale for looking at these properties so I would always suggest having a chat with them to see how they will treat it. Having something in writing from them can really help with the lender’s application too as it can mean the difference between completing before planning or PD is approved.

Investors are such a savvy, thick skinned breed. We have weathered so much over the decades, that having a creative approach to offer options on a given property will always keep us ahead of the economical fallout.  Your strategy may need to change but there will always be opportunities out there!

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