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Case Study – Maximising the value of a Semi Commercial / Mixed-Use Property

Semi commercial properties in walkway

Periodically, we come across cases which we believe other property investors would be interested to learn about. The summary below is one such case, highlighting the client’s unique requirements and how we provided a solution they were happy with. We hope you find this recent case study helpful.

The Property

The property was a Semi commercial / mixed-use property comprising of a ground-floor retail unit and 5 self-contained flats.

The ground floor retail unit was let via a fully repairing and insuring lease (FRI) to the client’s trading business which operated as a convenience store.

The 5 upstairs flats were let as short-term accommodation.

Client Background and Requirements

The client is an experienced landlord and business owner, who was looking to refinance their Semi Commercial / mixed-use property to release funds for further property investment.

The client wanted to maximise the value of the property in order to release the most funds possible.


As the property was a semi-commercial / mixed-use property, lenders typically lend based on the vacant possession value for the commercial element. This vacant possession value takes into account the time it takes for the commercial element to be tenanted, which often results in a lower valuation than that of market value.

As the flats are all on one freehold title, lenders will typically lend based on the investment/block value. This is the value of the block as a whole rather than the value of each individual flat. In this instance, there is often a discount in the valuation as it assumes that the property could only be sold to an investor rather than to owner occupiers.

Using this valuation method, the value for the property was £785,000. Based on this valuation the client was not able to raise a large enough loan to repay the existing balance while raising additional capital to invest in further properties.

Through our experience and expertise with arranging finance for mixed-use properties, we were able to help the client overcome this and meet their requirements.

We have access to 2 lenders that can lend on the aggregate value of the flats rather than the investment or block value. To be eligible for this, each flat must be above 30 square meters and saleable in their own right.

The aggregate value values the flats individually, as if they were to be sold off on their own individual long leaseholds rather than as a single block. This aggregate value is typically higher than the investment/block value as the flats are saleable in their own right and could be sold to both investors and owner occupiers.

In this instance when we obtained the aggregate value, this returned with a value of £1,115,000; an increase of £330,000 compared to the previous valuation of £785,000.

Thanks to this, not only was the client able to redeem the existing balance, but they were able to raise additional funds for further property investment.

How we can help you

At Advocate Finance we are experts in arranging finance solutions for mixed-use properties. If, like the above client, you are looking to maximise your lending options, please do not hesitate to get in touch with us today.

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