Unlocking Value in a Mixed-Use Property

The Situation

Our clients agreed to purchase a freehold block comprising 23 flats, together with three floors of vacant and derelict commercial space below.



The purchase price was £1.3 million, with the flats alone producing rental income of approximately £130,000 per year.

The clients had originally intended to convert the commercial space into residential accommodation, creating further development value.

The Challenge

A previous valuation had significantly undervalued the block. As a result, the original developer lender could no longer support the proposed loan, putting the transaction at risk.

With the clients having already paid a 10% deposit, a practical funding solution was needed quickly.



Finding a way forward

At a late stage, the clients decided to postpone the commercial-to-residential development and instead add the property to their growing portfolio of income-generating assets.

We restructured the transaction so that, on completion, the title was split:

• The 23 flats were placed on their own long leasehold title.
• The freehold retained the vacant commercial space and future development potential.
• The valuer confirmed a value of £1.3 million for the flats alone.
• We secured a 75% LTV loan against the long leasehold title at more competitive buy-to-let rates, rather than commercial mortgage rates.
• A comfort charge was placed over the freehold.

This structure allowed the clients to benefit from the residential rental income and valuation, while retaining the freehold as a separate asset that could potentially support further borrowing when they decide to proceed with the redevelopment.

We coordinated the lenders, solicitors, valuers and other parties to keep the transaction moving, completing with just three hours to spare.

The outcome

The clients secured:

• A 75% LTV loan against the 23 flats.
• Access to cheaper buy-to-let rates.
• A funding structure based on the value and income of the residential element.
• Continued ownership of the freehold and its future development potential.
• The ability to consider further funding when they are ready to redevelop the commercial space.

A complex transaction was restructured into a practical, income-led funding solution - allowing the clients to complete their purchase while preserving future opportunities.