But rather than view this as a reason to escape property investment altogether, we know that plenty of landlords are instead focusing on diversifying their portfolios, adding different forms of property in order to mitigate against risk.

Some will be looking at the likes of holiday lets and houses in multiple occupancy (HMO), recognising the opportunity to benefit from higher yields. However, we have also seen significant interest in commercial and semi-commercial investments, tapping into the demand from the business community to round out those portfolios.

 

Why investors are turning to commercial

There is no shortage of selling points to such forms of investment. Commercial properties can deliver higher yields, and crucially these can be more predictable than those on offer from other forms of property investment.

For example, it’s not uncommon for a commercial property to have more than one tenant on the premises. As with HMOs, this can provide the investor with multiple income streams, in itself offering some mitigation against issues should one tenant experience repayment problems.

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What’s more, the longer-term leases that commercial tenants sign – generally running for years at a time – provides more certainty for investors. The investor may be able to build in guaranteed rent increases over that term too, removing the need for awkward conversations with the tenant as would be the case with a regular buy-to-let investment.

In addition, appetite is growing among investors who recognise the chance to step in and pick up a property at a discount, given the movements in property prices over recent months.

There is also growing competition in this market, with big names making eye-catching changes to their product offerings of late. While the sector understandably became a little more cautious in the tail end of 2022, that appears to now be dissipating, with lenders becoming more confident and competitive. That can only be an excellent development for brokers and borrowers alike.

Given these circumstances it’s only likely that brokers will see increasing levels of enquiries for help with commercial and semi-commercial purchases.

Working together to find the right finance

The commercial and semi-commercial arena is not one that all brokers will be familiar with, and that can understandably cause some uncertainty. Property investors rely heavily on their brokers for guidance and advice. They view brokers as more than just a means of finding a cheap loan, but as trusted partners who can help them navigate the complex world of real estate finance. Equally, brokers themselves need a supportive system to help their clients make informed decisions based on their valuable insights and recommendations.

Commercial finance is undoubtedly a specialist area of the market, which can present a challenge to those brokers who only handle one or two cases a year. The products and criteria on offer can change significantly over time, and if brokers do not have well-established direct relationships with the active lenders, it can be difficult to identify the correct route for the client.

It’s because of these hurdles that we built the Provide Finance platform, which connects brokers with hundreds of lenders who operate in the specialist space. Our matching engine means that you’ll swiftly be able to pick out the right lender for the case, while support is on hand every step of the way to ensure that the application goes smoothly.

Just as property investors are keen to diversify, so too must brokers in order to help those clients build the most robust portfolios. Working with specialist partners can help advisers do just that, and secure the business of those clients for the long haul.