Who is Still Lending on Commercial Investment Properties?


August 12, 2021

Prior to the pandemic last year there were multiple lenders offering commercial mortgage solutions for commercial investment properties. As the pandemic increased its hold in April/May 2020 and lockdown was enforced, multiple lenders pulled out of this space almost entirely. With concerns rising over whether businesses would recover, lenders’ appetite shrunk to extend further facilities to commercial landlords renting out to third party tenants. With many businesses completely shut down, lenders were worried that commercial tenants would be unable to pay rent and in turn force commercial landlords into difficult positions with regards to making their payments. Although numerous financial institutions offered help by agreeing to payment holidays on lending facilities, with repeated lockdowns being enforced, there was uncertainty within certain sectors as to whether or not a full recovery would be possible if they were repeatedly asked to close.

We found many lenders started to dip their toe back into the market initially with commercial units of unaffected businesses ( determined by either their management accounts or the sector in which they operated) yet some high street bank lenders have still not opened up their doors to these types of facility. A number of high street banks have continued not to re-offer lending facilities, choosing instead to focus their efforts on CBILS BBILS and the latest Recovery Loan scheme. Some lenders in turn have preferred to offer facilities within the underserved commercial owner occupied market. This has led to a number of difficulties securing finance in the sector with increased interest rates at a time when commercial landlords are conscious of outgoings and costs of their premises. So who is still open for business in the sector and who has consistently offered financing options during the pandemic?

A number of the challenger banks have re-entered the market much to the jubilation of commercial landlords. Interbay, Aldermore, Shawbrook are offering commercial investment mortgage facilities at present. Together is also a lender who will look at a large range of commercial investment properties. Other lenders include Assetz capital, Ortus and Proplend to name but a few and some banks will consider larger commercial facilities of over £1m ( Cynergy is an example of a larger commercial investment mortgage provider that will consider larger loan facilities).

Recognise Bank who is a new entrant into the sector is also supplying these facilities but a number of the clearing banks have not resumed their lending in this area, making refinancing / purchasing with finance more expensive than previously.

Whilst we have seen greater appetite in the residential investment sector with many lenders reducing residential bridging rates and buy-to-let propositions this does not seem to be the case in the commercial investment sector. We hope to see more lenders extend facilities in what is currently a more underserved area and introducing lower rate options for commercial investment landlords.

Many lenders may be waiting to see the repercussions of the withdrawal of furlough as well as repayment of CBILS schemes that may affect the survival of commercial tenants in the short term. It might just have to be a question of wait and see but let’s hope we see more commercial lenders reducing rates on commercial term facilities in the near future.

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