Mixed-use properties – developments that combine residential, commercial, and sometimes leisure or hospitality spaces – are increasingly shaping the UK property landscape. From high street buildings with flats above to large-scale developments that blend retail, offices, and living spaces, they offer compelling investment potential.

In 2025, these assets are benefitting from a confluence of market shifts: renewed urban regeneration initiatives, changes in planning rules, and evolving tenant demand. However, the finance market for mixed-use remains nuanced, with lenders applying bespoke criteria that vary significantly depending on the property’s use mix, location, and projected income profile.

This guide examines how to secure funding for mixed-use property in today’s climate, where the opportunities lie, and how investors can position themselves to meet lender expectations.

Understanding the Mixed-Use Proposition

At its core, a mixed-use property is any asset that incorporates more than one distinct use class. Traditionally, this might mean a shop with residential flats above, but modern interpretations include far larger schemes – think of developments that feature co-working hubs, boutique hotels, restaurants, and luxury apartments under one roof.

The attraction is diversification: different income streams from different tenant types can provide a buffer against market volatility. For example, a retail downturn may be offset by stable residential rents. Conversely, buoyant commercial leases can underpin the asset’s overall yield, even in softer residential markets.

The Current Lending Climate

In 2025, lenders are showing renewed interest in mixed-use properties, but with conditions. The post-pandemic risk recalibration that caused some lenders to withdraw from retail-heavy assets has given way to more selective appetite.

High street lenders will still typically prefer a higher proportion of residential floor space – often 60% or more – to mitigate perceived volatility in the commercial element. Specialist lenders, however, may be more flexible, particularly if strong covenants back the commercial leases or if there’s a proven trading history.

Our blog on LTV, LTC, and GDV: The Three Numbers That Shape Your Property Deal explores how lenders use different valuation metrics, all of which can influence mixed-use loan terms.

Key Lender Considerations

When assessing a mixed-use finance application, lenders focus on:

• Use Class Balance: The proportion of commercial versus residential space.
• Tenant Profile: Strength of covenant, lease length, and sector.
• Valuation Approach: Whether the property is assessed as a commercial investment, residential investment, or hybrid.
• Experience: Borrower’s track record in managing mixed-use or commercial property.
• Exit Strategy: Especially critical for bridging finance, as discussed in Unlocking Capital with Bridging Loans.

Regulatory and Planning Changes in 2025

Recent adjustments to the Use Class Order have made it easier to repurpose certain types of commercial space into residential use without full planning permission. This is creating opportunities for investors to acquire underperforming retail or office assets and reposition them for stronger income potential.

We’ve seen increased interest from clients exploring these conversions, often pairing them with short-term development finance before refinancing onto a longer-term product. If you’re unfamiliar with how to approach this, our blog on Development Finance in 2025: What’s Changed and What Lenders Want Now covers the latest lender expectations.

Income Stability and Valuation Challenges

While diversification is a strength, it also introduces complexity. Mixed-use valuations can vary significantly depending on the surveyor’s approach. In some cases, the residential and commercial elements are valued separately and combined; in others, the asset is assessed as a single investment based on yield.

This means financing terms can differ wildly between lenders. For instance, one may offer a 70% loan-to-value facility based on a blended valuation, while another caps lending at 60% based on the commercial element’s perceived risk.

Understanding these nuances – and structuring your application to present the property in the most favourable light – is critical. This is an area where specialist broker input can make a decisive difference, as explained in High Net Worth Mortgages in 2025: What Lenders Look for Beyond Income.

Funding Routes in 2025

1. Specialist Buy-to-Let Mortgages
For smaller mixed-use assets with a high proportion of residential space, specialist buy-to-let lenders may offer competitive fixed or tracker rates.

2. Commercial Investment Mortgages
For more commercially weighted schemes, lenders will assess the property’s yield, lease terms, and tenant quality.

3. Bridging Finance
Short-term funding remains a popular tool for acquisition and refurbishment, particularly for properties requiring planning changes. See Short-Term Property Finance: Your Options for a full breakdown.

4. Development Finance
For ground-up or heavy refurbishment projects, development funding remains available, though lenders are closely scrutinising contractor experience and cost control.

Risk Mitigation Strategies

Investors should:

• Ensure commercial tenants have strong covenants and realistic rent levels.
• Diversify tenant mix to reduce sector-specific risk.
• Maintain healthy debt service coverage ratios (DSCR) to appeal to cautious lenders.

This aligns with the principles in Debt Consolidation with Property Finance, where managing leverage and cashflow is key to long-term stability.

Outlook for 2025 and Beyond

The mixed-use sector is poised for continued growth, particularly in regional cities benefiting from levelling-up investment. Lenders are expected to keep refining criteria to reflect evolving tenant demand patterns.

For well-prepared borrowers, 2025 presents a moment of opportunity – provided they can navigate the complex finance market and present a robust investment case.

How Willow Private Finance Can Help

At Willow Private Finance, we understand that mixed-use property transactions rarely fit into a neat, one-size-fits-all mortgage model. Whether you’re acquiring a high-street building with residential flats above, converting a warehouse into live-work spaces, or refinancing a mixed commercial portfolio, each project demands tailored funding solutions.

Because we are independent and whole of market, we are not tied to a single lender’s appetite or criteria. This allows us to source finance from across the spectrum — from high-street banks to private lenders, challenger banks, family offices, and specialist funds — ensuring you get the structure, rate, and flexibility that align with your goals.

Our experience spans deals from hundreds of thousands to structured facilities exceeding £100 million, covering complex borrower profiles, layered ownership structures, and challenging valuation scenarios. We also navigate the finer points — from lender stress testing and lease covenants to VAT considerations and planning permissions — so you can focus on maximising your property’s potential.

If you’re exploring mixed-use property finance in 2025, Willow Private Finance can help you:

• Access specialist lenders that understand non-standard assets.
• Structure facilities that combine both commercial and residential elements efficiently.
• Optimise loan-to-value and loan-to-cost ratios for development or refurbishment projects.
• Identify and mitigate risk factors early to protect lender confidence and your project timeline.

Frequently Asked Questions

What characteristics define a mixed-use property in 2025?
Mixed-use properties combine residential and commercial uses—e.g. a shop with flats above, a building with offices plus apartments, or retail/leisure space blended with housing. willowprivatefinance.co.uk

How do lenders judge the residential vs commercial split?
Lenders scrutinise the proportion of residential to commercial floorspace and income. Many prefer the residential component to be dominant (often ≥ 60 %) to reduce perceived risk. willowprivatefinance.co.uk+2foundationforintermediaries.co.uk+2

What tenant and lease factors are critical?
Strong tenant covenants, long lease lengths, low vacancy risk, and stable income streams from the commercial side improve the chance of approval. willowprivatefinance.co.uk+1

What valuation approaches do lenders apply?
Valuation may be done by treating the property as a blended investment (residential + commercial) or by separate valuations for each component, then combining them. Differences between methods cause variance in LTVs offered. willowprivatefinance.co.uk

How high can LTVs go for mixed-use property finance?
Typical LTVs are lower than pure residential properties; many lenders cap LTVs at 60-70 %. Higher LTVs depend on strong tenant performance, security, and borrower strength.

Which types of lenders are more willing to finance mixed-use properties?
Specialist property lenders, commercial funders, private banks, and challenger institutions tend to have more appetite. High-street lenders are often more cautious.



What structural or preparatory steps improve financing prospects?

• Present a clear exit or conversion strategy (e.g. converting commercial space to residential)
• Show experience with mixed-use or commercial assets
• Ensure strong tenant covenants and lease documentation
• Prepare detailed pro forma income and stress testing
• Use layered or staged financing (e.g. bridging or refurbishment finance before long-term hold) willowprivatefinance.co.uk+2willowprivatefinance.co.uk+2