Do the main lenders offer live/work residential mortgages?
Tags: Properties with land and country house mortgages, Residential mortgages
Quick Summary
Live/work residential mortgages can be difficult to arrange, depending on the lender you approach and the size of the business. Many mainstream mortgage lenders accept home offices or limited business use, but large-scale commercial centres, livery yards, kennels, farming or income-producing land are often declined. Lenders want the property to remain primarily residential, be easy to resell, and not depend on business income from the land. Private stables for personal use may be more acceptable, while smaller equestrian centres generating income are also acceptable to some lenders. Trinity Financial helps borrowers find lenders for complex rural homes, properties with acreage and live/work mortgage applications.
Do mortgage lenders offer live/work residential mortgages?
More people are running businesses from home, converting garages into studios, seeing clients in garden offices or buying properties with annexes, outbuildings or land. But getting a live/work residential mortgage is not always straightforward because mortgage lenders need to know the property is still mainly a home rather than a commercial premises. At Trinity Financial, we regularly arrange mortgages for properties with equestrian centres and stables, as well as for professionals running consultations from home.
Some lenders will consider live/work properties, but many do not. Some lenders say “yes with conditions” or will refer the case, while many mainstream and specialist lenders say live/work units are not acceptable security. The research also confirms that Halifax may consider live/work schemes on mainstream lending where the work element is less than 40% of the property, while other lenders require the property to be predominantly residential and suitable mortgage security.
What is a live/work mortgage?
A live/work mortgage is used for properties that are both homes and places of work. This might include a house with a treatment room, a studio, an office, a workshop, a consulting space or an annexe used for business purposes.
The key issue is whether the property remains predominantly residential. Lenders usually want to know:
- How much of the property is used for work
- Whether clients or customers visit the property
- Whether there is signage, staff, stock or commercial equipment
- Whether the property could easily be returned to full residential use
- Whether planning restrictions or title conditions affect the property
- Whether the business income is linked to the property
Do mainstream mortgage lenders accept live/work properties?
Some do, but it is case by case. Many lenders are comfortable with incidental business use, such as someone working from a home office. Fewer lenders are comfortable where a property has a meaningful commercial element.
One lender's policy update says there is no longer a fixed 20% work-use limit, although the property must still be more than 60% residential and capable of being restored to full owner occupation. The valuer will be expected to confirm the property’s predominant use. Another large bank says if the customer intends to run a business from the property, it can provide a mortgage only if the property is being purchased primarily for residential use and can be readily restored in its entirety to owner occupation. Trinity Financial's brokers have access to a private bank offering part commercial mortgages for £1 million+ properties.
Typical acceptable live/work examples can include:
| Type of work from home | Usually more acceptable? | Why lenders may consider it |
|---|---|---|
| Architect using a home office | Yes | Low-impact, office-based use |
| Accountant or consultant | Yes | Usually, limited client impact. |
| Chiropractor or physiotherapist | Possible | Depends on the treatment room, visitors and planning. |
| Artist or musician | Possible | Depends on studio use, noise and alterations. |
| Equestrian centre or stables | Yes | Depends on the scale and commercial element. |
| Camping facilities | Possible | Subject to lender criteria and size of business. |
| Temporary holiday lets | Yes | Some lenders may allow up to 90 days in a rolling 12-month period. |
| Annexe used for acceptable work/home purposes | Possible | Must fit lender criteria and valuation. |
What types of business use are lenders less likely to accept?
Lenders are usually more cautious when the property starts to look like a commercial trading business or the land/buildings are central to the income.
Examples listed as unacceptable by some lenders include:
| Business or property use | Why it may be difficult |
|---|---|
| Bed and breakfast | Usually treated as commercial hospitality |
| Guesthouse | Commercial use and trading risk |
| Kennels | Planning, noise and commercial use issues |
| Equestrian centre | Often commercial, land-based and operational |
| Campsite | Commercial leisure use |
| Country estate with fishing or hunting rights | Complex security and commercial/estate use |
| Property development | Development finance rather than residential mortgage |
| Permanent holiday let accommodation | Often treated as holiday-let/commercial lending |
| Commercial farming or livestock | Agricultural/commercial use |
| Forestry or croft | Specialist land/security issue |
| Nursing home | Commercial care business |
| Student accommodation | Specialist investment/commercial use |
This is not an exhaustive list, and lenders can take different views depending on the property, valuation, planning, income source and title restrictions.
Can you get a mortgage on a property with land or agricultural restrictions?
Some lenders will consider properties with acreage, although many have limits or require a referral. One policy states there is no maximum plot size, but where a property is over 4 hectares or 10 acres it will be subject to underwriter assessment and a suitable valuation report.
What about an equestrian centre?
Equestrian properties can be tricky but there are lenders happy with stables and lots of land. A private stable for personal use may be more acceptable than a commercial equestrian centre earning income from livery, lessons, events or horse-related services. However, if the property is over £1 million, then there are more options available through building societies and private banks.
If an equestrian centre generates income, lenders will want to know:
- What percentage of the property or land is used for the equestrian business
- How much income it produces
- Whether the applicant relies on that income
- Whether the use is commercial or personal
- Whether the property could be sold easily as a residential home
- Whether planning permission and business rates apply
One lender’s guidance says equestrian centres are among the business/commercial uses it cannot accept for this type of residential lending.
Ecology Building Society and part-residential mortgages
Ecology Building Society has a dedicated part-residential mortgage proposition for people who live where they work. Ecology says it considers live/work properties, mixed-use buildings and homes being converted into part-residential spaces.
Ecology’s criteria are different from many mainstream residential lenders. Its part-residential product is aimed at properties where a residential element is part of the security, but the business element may be significant. Ecology says the residential element must be less than 40%, with the business element 60% or more; where the residential element is 40% or more, its mortgage team may still be able to help.
Ecology also says it supports sustainable or community-focused businesses run from the property, renovations and conversions to create live/work environments, and small local businesses such as craft, wellbeing and sustainability services. It does not lend for holiday letting or businesses that do not meet its sustainability or community-benefit criteria.
Ecology is unlikely to offer rates as competitively priced as those of many of the bigger banks and building societies.
Why would someone want to work from home?
Working from home can be attractive for business owners, professionals and self-employed applicants who want to reduce costs and improve work-life balance.
The financial benefits can include:
- Lower office or studio rental costs
- Reduced commuting costs
- More flexible working hours
- Potential tax efficiency for some business expenses
- Better use of outbuildings, annexes or spare rooms
- Ability to build a business without separate commercial premises
- Easier childcare or family flexibility
- Potential to create long-term value by improving or adapting the property
For some borrowers, a live/work property can make much more sense than renting a separate office, clinic or studio. However, the mortgage must be arranged correctly because undeclared commercial use can cause problems with the lender, insurer, planning authority and future resale.
Aaron Strutt, product director at Trinity Financial, says: “Live/work mortgages are a specialist part of the mortgage market. Some lenders are comfortable with borrowers running a business from a room or office at home, but once the property has a stronger commercial element, the choice of lenders becomes much smaller.
“The key is to package the case properly. Lenders want to know how much of the property is used for work, whether clients visit, whether there are planning restrictions and whether the property remains easy to sell as a residential home.
“Borrowers buying properties with land, annexes, studios, workshops or equestrian facilities should take advice before making an offer. Some banks will decline these cases immediately, while others may consider them if the residential element is clear and the valuation supports the application.”
FAQs
Can I get a residential mortgage if I work from home?
Yes, many lenders accept normal home working, especially if you use a spare room as an office. It becomes more complicated if clients visit, the property has commercial areas, or a large percentage of the property is used for business.
Can I get a mortgage on a live/work unit?
Possibly, but lender choice is limited. Some lenders accept live/work properties if the home remains predominantly residential, while others will not lend on live/work units at all.
Are equestrian properties acceptable to mortgage lenders?
They can be, but large commercial equestrian centres can be harder to place. Lenders will check whether the facilities are for personal use or income-producing business use. Some lenders are more open to equestrian/residential mortgages than others.
Can I get a mortgage on a property with more than 10 acres?
Some lenders will consider larger plots, but they may need underwriter approval and a suitable valuation report. Agricultural use, commercial farming and occupancy restrictions can reduce lender options.
What is the best mortgage lender for a live/work property?
There is no single best lender. The right lender depends on the percentage of residential use, the type of business, the property layout, planning conditions, valuation and income structure. A broker can help identify lenders willing to consider the case.
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The information contained within was correct at the time of publication but is subject to change. It is for general information purposes and is not advice.
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