New data shows substantial growth in semi-commercial and HMO property acquisitions
Investment patterns among professional landlords are shifting markedly towards alternative property types, reflecting an ongoing search for improved returns in a challenging economic environment, lending data published by Shawbrook has shown.
Applications for semi-commercial assets increased significantly during the first half of 2025, rising 58% compared with the equivalent period last year. Within this category, retail premises with residential accommodation above have emerged as the dominant choice, capturing 69% of landlord interest, up from 60% 12 months earlier. Such properties attract investors partly because they generate income from multiple sources and may offer scope for residential expansion through permitted development rights.
Shawbrook also recorded growth in purchase applications generally, which climbed 32% year-on-year in the first half of 2025, compared with a 24% increase in the corresponding period of 2023 and 2024. This improvement signals a readiness among property professionals to commit capital despite ongoing market headwinds.
Houses in multiple occupation (HMOs) continue to gain traction among landlords seeking higher yields. HMOs accounted for 26% of Shawbrook's buy-to-let portfolio in the first half of 2025, a modest increase from 25% in the same period of 2024.
For mortgage brokers, this signals growing demand for specialist lending expertise. As landlords increasingly pursue semi-commercial and HMO investments to boost returns, brokers who understand these complex products gain a competitive advantage. The shift presents opportunities to advise clients on diversified portfolios, potentially securing higher-value deals. However, brokers must develop deeper knowledge of niche property types and their associated lending requirements to capitalise on this emerging market segment.
"While interest rates are more stable, they still remain high; and landlords continue to face a plethora of economic challenges," said Daryl Norkett (pictured right), director of real estate proposition at Shawbrook. "Despite this, they have once again proven themselves to be agile and adaptable, and are turning to property types which offer higher yields compared to traditional single lets.
"It is no surprise that semi-commercial properties are in demand, largely thanks to the benefit of having both commercial and residential space, meaning that landlords can enjoy higher yields with more diverse income streams. Often, there may also be future development opportunities. It is particularly encouraging to see more purchase business in the market as it indicated committed property professionals are expanding their businesses.
"HMOs require more intensive management but continue to offer good income when well run, and also give landlords the ability to pass through increases in market rents more quickly as tenants more regularly turnover. Those interested in exploring the semi-commercial and HMO markets or diversifying their portfolios should speak to a broker to better understand their options."
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