The UK’s professional landlords gravitated toward higher-yielding ventures in 2024, as revealed by Shawbrook's internal data, which showcased a sharp uptick in applications for semi-commercial and commercial properties. While overall application volumes held steady, landlords increasingly adopted diversification strategies to fortify returns in a turbulent economic climate.

Year-on-year, applications for semi-commercial properties surged by 31%, while commercial property applications rose by 28%. This significant pivot underscores a deliberate recalibration by landlords, seeking to capitalize on the enhanced yield potential these asset classes offer, even as market conditions remained challenging.

Parallel to this diversification trend, refinancing behaviours unveiled a more conservative posture among landlords managing their existing portfolios. Shawbrook’s analysis highlighted a rise in refinancing applications devoid of capital-raising components, paired with a decline in applications involving capital raising. This shift points to a prudent approach: landlords are choosing to mitigate debt burdens in a high-interest-rate environment by securing stability through fixed-rate products, such as Shawbrook’s ‘Switch & Fix’ initiative.

“2024 was the year of diversification for professional landlords,” remarked Daryl Norkett, director of real estate proposition at Shawbrook. “We saw them shifting their focus towards higher-yielding opportunities like semi-commercial and commercial properties, demonstrating their resilience and adaptability in a challenging market. Clearly many professional landlords are adapting to market conditions with a clear strategy.”

Additionally, Norkett emphasized the role of fixed-rate solutions in stabilizing portfolios. He noted, “Our ‘Switch & Fix’ offering has been instrumental in helping landlords achieve this balance, and we have more exciting plans in 2025 to support professional landlords manage and grow their portfolios.”

This deliberate balancing act, blending diversification with cautious portfolio management, exemplifies the adaptability of professional landlords. In a market characterized by uncertainty, these strategies are paving the way for sustainable growth and enhanced resilience.