Stamp Duty surcharge exclusion lures investors to semi-commercial

A surcharge of 3%, to be levied on all buy-to-let and second home purchases, was introduced on 1 April, but properties with both residential and commercial elements to them will not attract the higher fee.

Findings from a Specialist Lending Solutions poll showed that 75% of respondents have experienced a ‘slight uptick’ in semi-commercial enquiries, while 12.5% said they had seen a definite increase in interest. A further 12.5% reported no change.

Steve Larkin, director of development finance at LendInvest, said he has seen a ‘keen interest’ in semi-commercial deals of late.

“It’s really down to the strong demand for residential properties,” he said.

“Any time there is a chance to turn at least part of an old commercial building into residential property, it’s going to appeal to a developer.”

However, he said brokers and lenders need to consider both sides of the deal.

“Sure, there may be great demand for the residential side, but what about the plans for the commercial property? You want to be confident that there is a local demand for their services too,” he said.

Adrian Dadds, director of St Georges Finance, who deals with semi-commercial finance, said his company had not seen any particular change on levels before or after the Stamp Duty changes, which may a result of investor caution ahead of the EU referendum.

“If anything, I would say in the last week or so enquiries generally have slowed slightly,” he said.

“I wonder if this is as we get closer to the Brexit vote people are getting a little more cautious.”

Robert Collins, director of commercial finance at Brightstar, said there had been an increase in enquiries due to the expansion of the company, but that the Stamp Duty issue has also become a factor.

“Anecdotally, I am having an increasing amount of conversations with buy-to-let landlords asking me about commercial purchases, lending terms and Stamp Duty implications,” said Collins, who specified an interest in shops, pubs and cafes with upper residential units.

“So, at the very least, it seems to be putting investors into a position where they are looking at the possibilities,” he said.

Connect for Intermediaries owner Liz Syms, said that while she hasn’t noticed a specific increase in enquiries for semi-commercial applications, an overall upturn in commercial finance interest has been noted.