Recent analysis by Shawbrook reveals a significant shift in professional landlords’ strategies, with many focusing on higher-yielding property types such as semi-commercial and commercial properties. This trend, combined with cautious refinancing activity, highlights the sector’s adaptability and prudent approach to navigating current market conditions.
Rising Demand for Semi-Commercial and Commercial Properties
While overall mortgage application volumes remained steady, Shawbrook’s data shows a notable rise in applications for semi-commercial and commercial property purchases. Specifically, applications for semi-commercial properties increased by 31% year-on-year, while those for commercial properties rose by 28%.
This shift signals a growing appetite among landlords for higher-yielding investments, as they seek to diversify their portfolios and maximise returns in a competitive market.
A Year of Diversification
Commenting on the findings, Daryl Norkett, Shawbrook’s Director of Real Estate Proposition, described 2024 as a pivotal year for professional landlords.
“We saw them shifting their focus towards higher-yielding opportunities like semi-commercial and commercial properties, demonstrating their resilience and adaptability in a challenging market,” Norkett explained.
He added: “Clearly, many professional landlords are adapting to market conditions with a clear strategy. At the same time, more cautious landlords are focusing on managing existing debt carefully, securing stability through fixed-rate product transfers to sustain and grow their property businesses.”
Refinancing Reflects Cautious Debt Management
The analysis also highlights a trend towards cautious refinancing strategies. Applications for refinancing existing properties without raising additional capital have increased across all property types. Meanwhile, applications for refinancing with capital raises have declined.
This shift suggests that landlords are prioritising debt management in response to the high-interest-rate environment, aiming to protect their existing portfolios and maintain financial stability.
Resilience in a Challenging Market
Shawbrook’s findings underline the resilience and strategic decision-making of professional landlords as they navigate a dynamic property market. By diversifying their investments and taking a cautious approach to debt management, landlords are positioning themselves to weather current challenges and seize future opportunities.
For landlords considering their next move, the focus on higher-yielding properties and prudent refinancing could provide a blueprint for success in today’s market.
Clever Mortgages is here to support landlords with expert advice and tailored mortgage solutions. If you’re exploring new investment opportunities or looking to refinance, our team is ready to help you navigate your options with confidence.
