Regulated vs unregulated semi-commercial mortgages
When a semi-commercial mortgage falls under FCA rules, when it does not, and why occupation is the deciding factor.
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, the loan can fall under FCA-regulated rules. We refer those regulated cases to a regulated firm.
At a glance
- Investment / businessUnregulated
- Personal occupation of the flatCan be regulated
- RegulatorFCA, where it applies
- Our positionWe refer regulated cases out
Regulated versus unregulated, in short
Whether a semi-commercial mortgage is regulated turns mainly on who will live in the residential part. Lending to a business or investor against a property they will not personally occupy is unregulated. Lending to an individual who will personally occupy the residential element can be regulated.
The distinction matters because regulated and unregulated loans follow different rules, different protections and, in our case, different firms.
We are a finance arranger and introducer, not a lender, and we are not claiming to be FCA authorised. We arrange unregulated semi-commercial finance and refer regulated cases to a regulated firm.
When a semi-commercial mortgage is unregulated
The large majority of semi-commercial lending is unregulated. It is unregulated where the borrowing is for business or investment and no individual borrower will personally occupy the residential part:
- An investor buying a shop with a flat above to let both parts
- A limited company or SPV holding a mixed-use property in a portfolio
- A business buying premises it trades from, where the flat is let to a third party
Semi-commercial finance for business and investment borrowers is unregulated lending, outside the FCA's regulated mortgage perimeter.
When a semi-commercial mortgage can be regulated
The loan can fall under FCA-regulated rules where an individual borrower, rather than a company, will personally occupy the residential element of the property.
The clearest example is a sole trader or individual buying a shop with a flat above who intends to live in the flat themselves. Because the borrower's own home is part of the security, regulated mortgage rules can apply.
Where an individual borrower will personally occupy the residential element, the loan can fall under FCA-regulated rules, and we refer those cases to a regulated firm.
How occupation and the residential element decide it
Two factors interact: who occupies the residential part, and how large that part is.
| Situation | Likely treatment |
|---|---|
| Both parts let; borrower does not live there | Unregulated |
| Company or SPV borrower | Unregulated |
| Individual will personally occupy the flat | Can be regulated |
| Residential element ~40%+ of the property | May be treated as residential lending |
Where the residential element is roughly 40 percent or more of the property, it tends to be treated as residential rather than semi-commercial, which can also pull it toward regulated rules. Our 40 percent rule guide covers that split.
Why the difference matters to a borrower
Regulated lending carries consumer protections around advice, affordability and conduct that unregulated commercial lending does not. That is appropriate, because a regulated loan is secured on someone's home.
It also changes who can arrange the loan. An unregulated semi-commercial case can be arranged by a commercial finance introducer; a regulated case must be handled by an FCA-regulated firm.
How we handle each type
For unregulated, business and investment semi-commercial deals, we package the case, run it across the lender panel and arrange the finance directly.
For cases that look regulated, where an individual will personally occupy the residential part, we refer you to a regulated firm so the loan is handled under the right rules. We do not arrange regulated mortgages ourselves.
What to tell us at the outset
So we can route your case correctly from the start, tell us:
- Whether you or a company will own the property
- Whether you, personally, will live in the residential part
- Whether both parts will be let to third parties
- The rough commercial-to-residential split
Those answers determine whether the case is unregulated and ours to arrange, or regulated and one we refer to a regulated firm.
- Regulated mortgage
- A loan within the FCA's regulated perimeter, typically where an individual occupies the residential security, carrying consumer protections.
- Unregulated lending
- Business or investment lending outside the FCA's regulated mortgage perimeter, such as most semi-commercial finance.
- Residential element
- The part of a mixed-use property in residential use; who occupies it helps decide whether the loan is regulated.
Regulated vs unregulated semi-commercial mortgages: common questions
What is the difference between a regulated and unregulated mortgage?
A regulated mortgage sits within the FCA's perimeter, typically where an individual occupies the residential security, and carries consumer protections. An unregulated loan is business or investment lending outside that perimeter.
Is a semi-commercial mortgage regulated?
Usually not. Semi-commercial finance for business and investment borrowers is unregulated. It can be regulated where an individual borrower will personally occupy the residential element, and we refer those cases to a regulated firm.
What is a semi-commercial mortgage?
A loan secured against a mixed-use property with both a commercial and a residential part, such as a shop with a flat above, underwritten as a commercial facility.
Can I live in the residential part of a semi-commercial property?
Often yes, but where you personally occupy the flat the loan can fall under FCA-regulated rules. Tell us your plans at the outset so we route the case to the right firm.
Ready to talk to a specialist?
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