Semi-commercial or residential? Mixed-use classification calculator
Apply the 40 percent rule to your split and see whether a property reads as semi-commercial or leans residential.
- Commercial part0%
- Residential part0%
- ClassificationSemi-commercial
Indicative only. The exact threshold varies by lender, this is not an offer of finance, and mixed-use is charged at non-residential SDLT rates as an HMRC matter on which you should take advice.
How the 40 percent rule classifies a property
The calculator takes the residential part as a share of the whole property and compares it to the 40 percent threshold lenders commonly use. You can measure the split by floor area, the most common basis, or by value where the parts are worth very different amounts per square foot. Under 40 percent residential and a shop with a flat above reads as semi-commercial and is financed on a commercial, non-residential basis. At 40 percent or more residential the asset leans residential and may fall to residential mortgage rules.
Why the commercial and residential split matters
The split decides almost everything that follows: which lenders look at the deal, whether it is priced as commercial or residential, the loan to value on offer and whether the loan is regulated. A genuinely mixed asset sits in the semi-commercial bucket and reaches the specialist lenders and high street banks that back mixed-use property. A property that tips toward residential is a different conversation, and where an individual will personally occupy the residential part the loan can become FCA-regulated.
Classification, stamp duty and the next step
Mixed-use property is charged at the non-residential, or commercial, Stamp Duty Land Tax rates, which is often cheaper than residential rates on higher values. That is an HMRC matter, the classification can be challenged, and buyers should take tax advice rather than rely on a calculator. We are a finance arranger and introducer, not a lender. Tell us the asset and we will tell you how lenders are likely to treat the split and what that means for the loan.
Mixed-use classification calculator: common questions
What is classed as a mixed-use property?
A mixed-use or semi-commercial property has both a commercial part and a residential part, for example a shop with a flat above, an office with residential upper floors, or a pub with accommodation. Lenders look at the split between the two parts, by floor area or by value, to decide which side of the line the asset falls. As a rule of thumb, if the residential element is roughly 40 percent or more of the property it tends to be treated as residential.
How does the 40 percent rule work?
The 40 percent rule is the common lender test for a semi-commercial mortgage. Take the residential part as a share of the whole property, by floor area or by value. Under 40 percent residential and the asset reads as semi-commercial and is financed on a commercial, non-residential basis. At 40 percent or more residential it leans residential and may fall under residential mortgage criteria. The exact threshold varies by lender, so treat it as a guide.
Is mixed-use property charged residential or commercial stamp duty?
Mixed-use property is charged at the non-residential, or commercial, Stamp Duty Land Tax rates in England and Northern Ireland, which is often cheaper than the residential rates on higher values. This is an HMRC matter and the classification can be challenged, so buyers should take advice from a tax adviser or conveyancer before relying on it.
When does a semi-commercial deal become FCA-regulated?
Semi-commercial finance for business and investment borrowers is unregulated lending, outside the FCA's regulated mortgage perimeter. Where an individual borrower will personally occupy the residential element of the property, the loan can fall under FCA-regulated rules. We are a finance arranger and introducer, not a lender, and we refer those regulated cases to a regulated firm.
Not sure which side of the line you sit?
Send us the floor areas or values for each part, and we will tell you how lenders would classify it and what finance fits within one working day.