A mixed-use terraced property combining a let commercial unit with a renovated residential duplex suitable for HMO adaptation. The case shows how value can be created by separating the commercial income, residential conversion route and refinance assumptions.
The property comprised a 3-storey mixed-use terrace with a renovated 3-bed duplex apartment above a ground-floor commercial premises. The commercial unit had been let on a 3-year FRI lease, while the apartment had potential for conversion into a 4-bed professional HMO.
The problem
The opportunity needed a clearer buyer narrative because it was not a simple residential purchase. It combined commercial income, HMO conversion potential, compliance works, refinance assumptions and management considerations.
What was done
Root Home presented the opportunity as a mixed-use value-add case, separating the contracted commercial rent from the residential HMO potential and showing the combined income, works budget and refinance profile.
Project media
Delivery and works
Scope
Minor works were required, including adaptations to make the renovated apartment HMO compliant, with an allowance included in the financial model.
Execution
The commercial unit was already let on an FRI lease, while the residential element was positioned for HMO adaptation based on its layout, renovation standard and rent assumptions.
Stabilisation
The stabilised route combined contracted commercial rent with professional HMO income after adaptation, management and operational cost assumptions.
Financial outcome
Total cost
£233,300
Total capital deployed.
End value
£237,000
Delivered value.
Profit or uplift
£22,000 uplift
Primary project result.
Yield
19.35%
Reported where relevant.
Programme
TBC
Total programme.
Units delivered
Commercial + 4-bed HMO route
Output delivered.
Result and impact
Operational result
The asset could be assessed as a mixed-use income opportunity with commercial rent already contracted and a defined residential HMO optimisation route.
Who benefits
A buyer comfortable with mixed-use assets benefits from contracted commercial income, a separately assessable residential uplift route and multiple income streams.
Why it matters
This case shows how mixed-use stock can be evaluated through layered income rather than a single residential valuation or open-market rent lens.
Lessons and strategic value
– Mixed-use assets need commercial and residential income shown separately.
– HMO compliance costs should be budgeted transparently.
– FRI leases can reduce operational burden.
– Refinance and income assumptions need to be explained together.
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