Commercial Watch Episode 2 | Waiting for the Bounceback. In the first instalment of our Commercial Watch series, we explored the idea of “When One Door Closes.” Episode 2 turns to a timely theme: “Waiting for the Bounceback.”
The commercial mortgage market experienced a sharper decline than most sectors during the pandemic, with the hospitality industry particularly affected. In response, commercial lenders took a more cautious stance, tightening lending criteria, lowering loan-to-value (LTV) ratios, and excluding certain sectors from eligibility altogether.
Now, as high streets reopen and footfall returns to pubs, restaurants, and cafés, optimism is gradually returning. But key questions remain for advisers and landlords alike:
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When will demand for commercial property finance begin to recover?
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Will empty retail units attract new tenants?
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And how will long-term shifts like remote working reshape the need for traditional office space?
As the landscape evolves, advisers working with specialist BTL lenders and commercial finance providers will need to stay agile and well-informed to help clients seize new opportunities.
Green Shoots
Commercial mortgage appetite is beginning to return, although many lenders remain selective. There’s growing interest in sectors such as takeaway outlets and warehouse spaces—business types that proved resilient during lockdowns. However, financing for pubs remains a challenge, especially given their operational struggles even before the pandemic. Case in point. 
Notably, their affordability calculations factor in income derived from diverse business sources, showcasing adaptability amid economic uncertainties.
Some lenders are introducing more flexible affordability models to help assess complex cases. For instance, Together has recently supported a small hotel impacted by COVID-19, using a broader income-based assessment. Their lending criteria reflect a willingness to consider income from multiple sources, offering tailored support in uncertain conditions.
Still, caution is evident across parts of the market. While certain lenders are exploring opportunities, others remain focused on areas like the buy-to-let (BTL) sector, particularly where the lending risk is more measurable.
BTL lenders often concentrate on properties such as houses in multiple occupation (HMOs) and multi-unit freehold blocks (MUFBs). Restrictions are common, typically limiting the number of bedrooms or units to between four and eight.
On the other hand, commercial lenders, including providers such as InterBay, are often equipped to finance larger properties, supporting up to 20 units or bedrooms. This contrast highlights how lenders are refining their strategies to meet the unique demands of commercial and specialist buy-to-let lending.
Limited Company
Limited companies represent a unique segment within the property finance market. While many buy-to-let lenders cater to limited company structures, commercial lenders are better suited to handle more complex arrangements.
It goes beyond simply forming a special-purpose vehicle (SPV) for buy-to-let purposes. Some lenders, including Hampshire Trust and Shawbrook, also consider applications from active trading companies. These are businesses involved in broader commercial activities, not solely focused on property investment.
Take, for example, a tradesperson such as a plumber who wants to use retained profits from their company as a deposit for a buy-to-let purchase. In such cases, commercial buy-to-let lenders can provide solutions tailored to these more involved financial backgrounds.
Suppose the business has ties to an offshore structure or a trust. In that case, commercial lenders also have the flexibility and expertise to assess and support these scenarios, which often fall outside the scope of traditional BTL providers.
Holiday-let properties are also seeing strong momentum in the current market. With a growing preference for UK-based travel, demand for domestic short-term rentals continues to rise. This shift has led to a noticeable increase in holiday-let mortgage enquiries and approvals.
Traditional BTL lenders do support holiday-let properties, particularly since changes to mortgage interest relief made personal ownership through a trading business more attractive. If the property is registered as a business with HMRC and held in the individual’s name, higher-rate taxpayers can still benefit from full mortgage interest deductions.
Lenders such as YBS Commercial Mortgages have entered this space, bringing a different lending model to the table. Rather than basing affordability on typical family rental income, commercial lenders assess holiday lets as fully operational businesses.
This means affordability is calculated by subtracting operational costs from projected revenue from bookings to determine borrowing potential. In many cases, this leads to significantly greater borrowing capacity than standard BTL metrics would allow.
For brokers managing specialist buy-to-let cases, access to these types of lenders through a Specialist Mortgage Network can provide critical advantages. Those working with portfolio landlords, limited companies, or complex income structures can benefit from lender flexibility and broader criteria.
Looking to support clients in the holiday-let or limited company space? Learn more about how our Buy-to-Let Mortgage Broker Services can help you access the right solutions across the specialist and commercial markets.
Government Support for Business Recovery
To support economic growth and strengthen UK businesses, the government introduced initiatives such as the Recovery Loan Scheme to help firms recover from the impact of the Covid-19 pandemic. These loans are designed to improve cash flow, fund expansion plans, or support day-to-day operations.
Instead of offering interest-free borrowing, the government provides a guarantee to participating lenders. This backing encourages lenders to approve funding they might not typically offer, reducing risk and boosting access to finance for small and medium-sized businesses.
A full list of approved lenders offering Recovery Loans can be found on the British Business Bank website.
While the direction of the commercial property market remains uncertain in the coming months, many businesses are turning to super specialist buy-to-let lenders and niche commercial finance providers for tailored support. These lenders often provide flexible solutions for complex borrowing needs, including limited company buy-to-let, semi-commercial property, and portfolio landlord mortgages.
By combining government-backed lending schemes with specialist commercial buy-to-let products, businesses gain a stronger foundation for rebuilding and expanding in today’s evolving economic landscape.
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