Lendus.

Mixed-Use Development Finance

Finance for developments combining residential and commercial elements — such as apartments above retail, live-work units, or town-centre regeneration schemes — requiring lenders experienced in blended asset valuations.

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Rates

7.0% – 12.0%

per annum

LTGDV

Up to 60%

LTC

Up to 80%

Timeline

12-24 months

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Finance structure

Senior Development Loan

Rate
7.5% - 11.0%
LTC
Up to 75%

Best for: Town-centre and urban regeneration schemes with a mix of residential sales and retained commercial investment

Stretched Senior

Rate
9.0% - 12.0%
LTC
Up to 80%

Best for: Developers seeking single-lender simplicity on mixed-use schemes with strong residential component and let commercial

Mezzanine

Rate
13% - 18%
LTC
Up to 87%

Best for: Larger regeneration schemes where the developer seeks to maximise leverage ahead of residential pre-sales

Key considerations

Exit strategies

Sale of residential units with retention of commercial element as investment
Full sale to a single investor or regeneration fund on a mixed-use yield basis
Block sale of residential element combined with long-term commercial investment refinance

Eligibility

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Market context

Mixed-use development has become central to UK planning policy, with the National Planning Policy Framework actively promoting ground-floor commercial uses in town-centre and high-street locations. An estimated 15–20% of new development finance completions by value now involve a mixed-use element. The commercial component in mixed-use schemes has shifted markedly toward food and beverage, healthcare and flexible workspace from traditional retail, reflecting changing occupier demand. Despite higher complexity, well-located mixed-use schemes with income-producing commercial elements command premium pricing from investment buyers and REITs, supporting strong overall GDVs.

Frequently asked questions

Why is the LTGDV lower for mixed-use schemes than pure residential?
Lenders apply lower leverage to mixed-use schemes because commercial property values are more volatile and harder to exit quickly than residential. A lower maximum LTGDV of 60% reflects this blended risk. The specific LTGDV available depends on the proportion of the GDV attributable to residential versus commercial — a scheme that is 80% residential by value will attract lending closer to residential development norms.
Can I retain the commercial units as a long-term investment?
Yes — many mixed-use developers build to retain commercial income and sell the residential element. Lenders will factor this into the exit strategy, with the commercial retention refinancing onto a commercial investment mortgage at practical completion. You will need a clear letting strategy and ideally a signed lease or agreement-for-lease before approaching lenders for the development facility.
How are mixed-use buildings valued for lending purposes?
Lenders instruct a RICS valuer to provide a single development appraisal that separately values the residential units (comparable market value) and the commercial element (investment value using a market yield and passing or projected rent). These are then combined to produce the GDV. Lenders apply a haircut to the commercial value of 10–15% greater than for residential, reflecting liquidity risk.
What happens if I can't let the commercial units before practical completion?
Void commercial space at completion is a significant concern for lenders and can restrict your ability to refinance to a term loan. If you are unable to let the commercial element, your exit options may include selling with a void at a discount, instructing a letting agent on incentivised terms, or maintaining the development finance facility with a short extension while you secure a tenant. Building in a void period within your financial model from the outset is recommended.
Are mixed-use schemes eligible for SDLT relief?
Yes — mixed-use properties attract the non-residential SDLT rates (maximum 5%) on the entire purchase price, rather than the higher residential SDLT rates that would apply to a pure residential acquisition. This is a well-established planning and purchase tool, though HMRC applies strict tests for what qualifies as genuinely mixed-use. Legal and tax advice should be obtained at the acquisition stage to confirm treatment.

Related project types

Ground-Up Development New Build Residential

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