Opportunities Within a Shifting Market
While market disruptions posed difficulties, they also opened up possibilities for strategic investors and business owners. Declining property values created favourable conditions for buyers with long-term vision. Those prepared to act quickly found unique prospects to acquire assets at competitive prices. For well-positioned clients, this period offered an opportunity to benefit from changing market dynamics.
However, securing funding during this time was far from simple. Lenders varied in their risk appetite, making it harder to arrange finance for commercial property purchases. This inconsistency across lending institutions required careful assessment and persuasive business cases. Borrowers had to demonstrate financial resilience and a strong understanding of current market challenges.
Precision Planning in a Complex Lending Climate
Achieving success in this environment required aligning lender requirements with a sound commercial strategy. Investors needed to carefully review funding options and ensure they were compatible with their operational goals. Informed planning and due diligence were essential for anyone considering a move into the commercial or specialist buy-to-let space.
Despite the volatility, the UK commercial property sector offered substantial potential. Advisers and clients who approached the market with the right tools and insights could identify areas of growth and value. Resilience and flexibility remained key to long-term success.
Sector Caution Remains
Consider a longstanding manufacturing company aiming to expand. To release funds for a major contract, the business attempted to refinance its premises. Yet reduced enthusiasm from lenders within the industrial segment, combined with tighter underwriting standards, limited funding options. The business received only a 60 per cent loan-to-value offer, which restricted its ability to move forward.
To help resolve this, our team introduced a flexible commercial bridging finance solution. Bridging loans, known for their adaptability, offered immediate capital while allowing time to execute a strategy. In this case, the client generated liquidity by planning the sale of underused land assets. The capital raised covered loan repayment and fuelled future growth.
This example demonstrates the value of tailored finance strategies. In situations involving specialist lending or niche asset classes, a well-structured exit plan becomes vital. Businesses that combine market awareness with proactive financial planning can transform obstacles into progress.
For advisers working with similar cases, our Specialist Mortgage Network for Advisers provides essential support, including access to non-standard lenders and expert packaging guidance.
Varied Market Reactions
As consumer behaviour shifts, sectors such as hospitality are showing signs of recovery. This revival has influenced how some lenders view business categories that were once seen as high-risk.
In one case, a profitable dental practice applied to release equity during lockdown but was declined by a mainstream lender due to overall market concerns. The same lender has since revised its outlook, now expressing confidence in the business. Yet its caution remains when assessing applications from other industries.
This uneven approach reflects a broader reality: lender sentiment is evolving, but selectively. Advisers must closely monitor lender policies and sector preferences to ensure clients receive appropriate recommendations. Our Buy-to-Let Mortgage Broker Support service helps advisers navigate these shifting policies and identify aligned lenders.
A Return to Lending, but With Limitations
Surprisingly, takeaway businesses, once considered low-priority in commercial lending, outperformed expectations during the economic downturn. This reversal highlights the unpredictability of sector performance.
Overall, the lending market is showing signs of recovery. Many lenders remain engaged, particularly through the government’s Recovery Loan Scheme. With government backing covering a significant portion of lending risk, this program attracts focused interest from funding providers.
At the same time, alternative lending channels have seen reduced activity as resources are directed toward the scheme. This dynamic environment means advisers must understand the full spectrum of options available to clients, especially when traditional products are constrained.
For brokers needing guidance on compliance or packaging for complex lending situations, the Mortgage Network for Advisers can offer both strategic and operational support.
Post-COVID Lending Sentiment in Commercial and Specialist BTL Markets
Lenders remain highly attentive to how businesses performed during the pandemic, particularly when reviewing applications for commercial and specialist buy-to-let finance. Underwriting teams are paying close attention to how companies adapted during lockdowns and are emphasising their post-COVID strategies. Concerns about potential future restrictions still influence decision-making in the commercial property lending space.
Gareth Norman, specialist adviser at Connect for Intermediaries, notes that while activity in the commercial property market has improved since Covid restrictions were lifted, caution remains in sectors such as retail and hospitality. These industries were among the most heavily impacted, and questions remain around long-term recovery. The future of office spaces also presents uncertainty, as many companies restructured their business models during the pandemic, leaving unknowns about how these properties will perform as collateral for loans.
Despite the resurgence of foot traffic on high streets and growing consumer demand in leisure and hospitality, lender confidence has not fully rebounded. Some providers remain hesitant, particularly when assessing assets tied to variable income streams.
Norman adds that lenders are focusing more on owner-occupier commercial spaces, where financial performance during the pandemic can be clearly assessed. While most lenders are still cautious, a few are showing flexibility. One provider is now offering up to 100% loan-to-value for powerful businesses, provided there’s a solid five-year repayment strategy in place. This suggests a gradual return of more competitive and innovative products.
Property development is experiencing an interesting surge
He also observes renewed activity in the property development lending market. Demand is rising, but challenges remain due to higher build costs driven by material shortages—a trend that emerged post-Brexit. Developers may need to adjust margins or pricing strategies to account for these shifts.
Lenders such as Allica Bank and Shawbrook have remained active since the early stages of the pandemic and continue to serve as reliable funding sources. Their consistency has made them popular choices for advisers seeking stable commercial lending partners.
Other familiar names, including Together and Cynergy, have re-entered the market, while newer players like Recognise Bank are making their presence known. Though still operating through a limited distribution model, Recognise has long-term goals to introduce fresh competition into the commercial lending space.
Kevin Thomson, commercial director at Connect for Intermediaries, anticipates a measured recovery in lender appetite. Provided the market avoids any major disruptions, he expects stronger momentum and improved product availability in the first quarter of 2022.
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Thank you for reading our publication “Commercial Watch Episode 3 | Understandable Wariness.” Stay “Connect“-ed for more updates soon