Commercial property investment: how purchases are financed

Commercial property investment means buying business premises, such as shops, offices, warehouses or workshops, in order to rent them out. The return comes from rent and any change in the building’s value.

This post is written for the business or company raising finance to buy. Capzy arranges debt finance and does not offer investment products or promote investing in property.

Most purchases are financed with a commercial mortgage, sometimes alongside a short-term loan or finance secured on another asset. The British Business Bank describes two kinds of commercial mortgage: owner-occupied, for a business buying premises for its own use, and commercial buy-to-let, for a business that intends to rent the property to another business.

Our guide to commercial mortgages explains the main product in more detail, and the lender directory shows which providers work in that area.

Lenders look at the business, the property and the income. The British Business Bank says commercial lenders examine your business’s trading history and usually want accounts for at least the past three years and projected trading figures for the future.

• The borrower’s accounts, and the directors’ position where there is a company
• The building: its use, condition, location and valuation
• The tenant and the lease, if the property is let
• The deposit and the loan against value (see our explainer on loan to value)

The weight a lender gives each point varies, and there is no single figure that decides an application. Lenders may ask directors for a personal guarantee. Everything is subject to status and lender criteria.

The deposit depends on the lender, the property and the borrower, so there is no set figure. A commercial lender normally advances a share of the value and expects you to fund the rest from your own money or another asset.

A secured loan on another asset can sometimes fund the deposit, according to the British Business Bank. That adds a second debt and a second asset at risk, so work out the combined repayments before you commit.

In the usual case no. The FCA says loans secured on commercial premises are not regulated mortgage contracts, because the property is not used as or in connection with a dwelling.

That means the consumer mortgage rules do not generally apply, and you are expected to read the terms with business-level care. Ask for the full cost, including fees, early repayment charges and what happens if a tenant leaves.

If a mortgage lender declines, the reason usually points to the fix: a thin trading history, a property the lender does not like, or too little deposit. Ask the lender or broker which it was before you apply elsewhere, because each application can leave a footprint on your credit file.

Options include a larger deposit from your own money, a different building, a lender that specialises in that kind of property, or a short-term loan while the position improves. Our guide to why business loans get declined explains the common reasons, and the semi-commercial mortgage guide covers buildings that mix business and residential use.

Bridging finance is used for a gap, such as buying quickly or funding work before a mortgage is possible. The British Business Bank says bridging loans typically cover no more than 18 months and have higher interest than a mortgage.

A lender will expect a clear way to repay, either a sale or a refinance onto a longer-term loan. Our guide to bridging loans covers how they work.

In England and Northern Ireland, Stamp Duty Land Tax on non-residential property is 0% up to £150,000, 2% on the next £100,000 and 5% above £250,000, as of October 2026. GOV.UK sets out the bands for freehold purchases.

The return and payment are due within 14 days of completion. Our guide to stamp duty on commercial property covers leases and what counts as non-residential. We do not give tax advice, so ask a solicitor or accountant to confirm the figure.

The main risk is that the loan has to be repaid whether or not the property is let. A vacant unit earns no rent and the mortgage payment stays the same.

• Void periods and tenants who leave or fall behind on rent
• A valuation that comes in below the price you agreed
• Variable interest that rises and squeezes the rent cover
• Guarantees that make directors personally liable

Capzy is a credit broker, not a lender, and is paid by the lender. We can introduce a business buying commercial property to lenders that offer commercial mortgage and bridging finance and set out what comes back so you can compare it.

You can check your funding options with a soft search that does not affect your credit score. A full application to a lender may involve a hard search, and any offer is subject to status and lender criteria. We arrange debt finance and do not offer investment advice, and we do not give tax or legal advice.