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Bridging Loans for Commercial Property

Commercial bridging finance unlocks transactions that mainstream lenders cannot process quickly enough — or at all. Whether you are acquiring a retail unit, an office building, a pub, a hotel, or a mixed-use block, a commercial bridge gives you the speed to outmanoeuvre competitors, complete distressed acquisitions, and position assets for long-term commercial mortgage refinance. Lenders focus on asset value and exit viability, not just trading history.

200+ UK lenders
2-minute application
No credit check to apply
FCA-regulated brokers

Rates

0.5% – 1.3%

per month

Typical Term

6-18 months

Max LTV

Up to 70%

Amount

£150k – £20m

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How it works

1

The lender instructs a commercial valuer to produce a Red Book valuation of the property in its current state. If the building is vacant or distressed, the valuer will also provide a reinstatement value and a forced-sale estimate.

2

A formal credit assessment considers the property type, location, covenant strength of any existing tenants, your track record in commercial property, and the exit strategy.

3

On completion, the bridge funds the purchase. Commercial transactions often involve more complex legal structures (leases, title investigations, VAT considerations) that extend the timeline slightly, though most lenders still target 10-25 working days.

4

The exit is typically a refinance onto a long-term commercial mortgage once the property is stabilised — tenanted, refurbished, or repositioned — or an outright sale to an owner-occupier or investor.

When to use this type of bridging

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Risks to consider

Important

  • Commercial property values are more volatile than residential, particularly in the retail and office sectors; a change in market sentiment during the bridging term could affect your ability to refinance or sell at the expected value.
  • Vacant commercial properties attract higher insurance costs and are subject to business rates liability; empty property relief reduces but does not eliminate rates exposure, and these holding costs mount during the bridging term.
  • Commercial mortgage underwriting for the exit can be lengthy and conditions-heavy; if the property is not producing a contracted rental income that meets the lender's debt service coverage ratio, the refinance may be delayed or declined.

Market context

UK commercial property transaction volumes reached approximately £40 billion in 2025, with the industrial/logistics and alternatives sectors accounting for the largest share of activity. Offices and retail continue to trade at significant discounts to pre-2020 values — creating opportunity for value-add investors — with some secondary retail assets trading at yields of 10-14%. Commercial bridging completions grew 23% in 2025, driven by permitted development conversion opportunities and distressed asset acquisitions.

Frequently asked questions

What types of commercial property can be bridged?
Most commercial bridging lenders will consider retail units, offices, industrial and warehouse buildings, pubs and restaurants (trading or vacant), hotels, care homes, mixed-use buildings (commercial ground floor with residential above), and land with commercial consent. More specialist lenders also consider petrol stations, caravan parks, and marina berths. Assets with significant environmental liabilities or those subject to active legal disputes are generally declined.
Is VAT applicable on a commercial bridging loan?
VAT on a commercial property transaction depends on whether the vendor has opted to tax. If they have, you will pay 20% VAT on the purchase price, which may need to be funded as part of the bridge. Some lenders will include a VAT facility within the overall structure, though this adds complexity and cost. Your solicitor and accountant should confirm the VAT position of the specific property before you commit to the transaction.
How does a commercial bridge work for a permitted development conversion?
Permitted development rights (PDR) allow certain commercial buildings — particularly Class E offices and some retail units — to be converted to residential use without full planning consent, requiring only a Prior Approval application. A commercial bridge funds the acquisition and sometimes initial conversion costs, with the exit being either a sale of the completed residential units or refinance onto development finance for larger conversions. PDR bridges are increasingly common and well understood by specialist lenders.
Can I get a commercial bridge if the property is vacant?
Yes — commercial bridging lenders are accustomed to lending on vacant commercial assets and do not require the property to be income-producing at the point of lending. This is one of the key advantages over commercial mortgages, which typically require evidence of contracted rental income meeting a debt service coverage ratio. The lender will focus on the asset value, comparable evidence, and your exit strategy rather than current income.
What are typical arrangement fees on a commercial bridge?
Commercial bridging arrangement fees typically range from 1.5% to 2.5% of the loan amount, reflecting the greater complexity of commercial underwriting. Legal fees are also higher — expect dual representation (borrower and lender solicitors), potentially with complex title and lease reviews adding to the overall cost. For larger transactions above £5 million, fees are often negotiated individually. Always obtain a full cost illustration from your broker before committing.

Related bridging loans

Land Purchase Renovation Development Exit

Guides and resources

How Bridging Loans Work Bridging Loan Costs Bridging vs Mortgage Best Bridging Lenders Together Money Review

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