Commercial property targeted by fed-up residential investors - claim

A bank says seasoned property investors are sizing up commercial opportunities given the hostile landscape for residential investment.

Emma Cox, MD of Real Estate at Shawbrook, comments: “As we grapple with persistent inflation and high living costs, buyer confidence has wavered. Professional landlords typically use mortgages to expand their property portfolios, so a drop in mortgage approvals can slow down their portfolio growth.

"Nonetheless, specialist lenders are stepping in to assist with complex cases, and Shawbrook has observed an increase in landlords embracing diversification strategies, including more commercial assets. This signals the resilience and adaptability of seasoned investors who remain focused on seizing fresh opportunities."

Her comments follow the latest release of Bank of England mortgage and credit data - widely seen by the industry as disappointing.

Net borrowing of mortgage debt by individuals decreased from £1.1 billion in August to -£0.9 billion in September – the lowest since April 2023 - while net mortgage approvals for house purchases fell to 43,300 in September, the lowest level since January 2023. 

Net approvals for remortgaging fell to 20,600 in September, the lowest level since January 1999 - almost 25 years.

The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages saw a 19 basis point increase and now sits at 5.01 per cent.

Net borrowing of consumer credit by individuals amounted to £1.4 billion in September, down from £1.7 billion in the previous month, while households withdrew £0.7 billion from banks and building societies in September. 

This was driven by net outflows from interest-bearing and non-interest bearing sight deposit accounts of £6.2 billion and £2.8 billion respectively. This is partly offset by net flows of £5.3 billion into time deposit accounts.