Investment Report: 84 Lee High Road, Lewisham (SE13) : Mixed-Use Freehold with Secure Commercial Income and Three Residential Flats

Modern mixed-use commercial property representing high street freehold investment

1. Executive Summary

This investment report provides a technical evaluation of the freehold mixed-use asset located at 84 Lee High Road, Lewisham, London SE13. The property comprises a ground-floor retail unit and three self-contained residential flats on the upper floors.

The primary metrics for the acquisition are outlined below:

  • Asking Price: £650,000
  • Asset Type: Freehold Mixed-Use
  • Current Gross Rental Income: £54,000 per annum
  • Commercial Income: £14,400 p.a. (£1,200 pcm)
  • Residential Income: £39,600 p.a. (£3,300 pcm total across three flats)
  • Mortgage Facility (75% LTV): £487,500 at 6% interest-only
  • Net Annual Profit: £24,750
  • Cash-on-Cash Return on Investment (ROI): 15.23% (based on a £162,500 deposit)

Through Realty Packaging, investors receive verified data points and comprehensive due diligence to support portfolio growth in London’s commercial real estate market.

2. Property Description and Asset Composition

Vibrant high street retail commercial properties with mixed-use structures

84 Lee High Road is a structured freehold building combining commercial and residential tenures within a single title.

Commercial Component

  • Unit Size: 51.5 m² (554 sq ft) ground-floor retail space.
  • Tenant: Let to MY Hair Lounge.
  • Lease Terms: 10-year commercial lease commencing December 2019.
  • Rent: £14,400 per annum (£1,200 per calendar month).

Residential Component

  • Configuration: Three self-contained residential flats situated on the upper floors.
  • Rental Income: £3,300 per calendar month in total (£39,600 per annum), averaging £1,100 per month per flat.
  • Tenure Structure: Assured Shorthold Tenancies (ASTs).

This dual-income configuration mitigates vacancy risk by diversifying revenue streams across distinct market sectors.

3. Financial Analysis and Debt Structuring

Prime retail centre opportunity and income-generating commercial assets

Acquisition metrics are evaluated using a standard leverage model at 75% Loan-to-Value (LTV).

Income and Expenditure Model

  • Gross Rental Income: £4,500 p.m. (£54,000 p.a.)
  • Commercial Contribution: £1,200 p.m. (£14,400 p.a.)
  • Residential Contribution: £3,300 p.m. (£39,600 p.a.)

Debt Service and Net Yields

  • Purchase Price: £650,000
  • Deposit (25% plus acquisition costs): £162,500
  • Mortgage Amount (75% LTV): £487,500 at 6.0% interest-only
  • Monthly Mortgage Interest: £2,437.50
  • Net Monthly Profit: £2,062.50
  • Net Annual Profit: £24,750
  • Cash-on-Cash ROI: 15.23%

The transaction demonstrates positive cash flow under prevailing commercial debt terms.

4. Location Overview and Macroeconomic Context

Modern multi-storey development in urban commercial corridors

Lee High Road functions as a primary arterial route through the London Borough of Lewisham. Key location metrics include:

  • Regeneration Status: Lewisham is classified as an undervalued growth corridor within Greater London.
  • Transport Connectivity: Lewisham station provides direct rail services to London Bridge (10 minutes), Charing Cross (20 minutes), and Cannon Street. The DLR connects to Canary Wharf and Bank. Proposed transport enhancements include future considerations for the Bakerloo Line extension.
  • Demand Drivers: Spillover demand from adjacent higher-value boroughs, including Greenwich and Southwark. Average property values in SE13 approximate £6,036 per square meter.
  • Local Economy: Proximity to the Lewisham Gateway development zone, local retail nodes, and continuous student and young professional population influx.

5. Corporate Structuring: Limited Company vs. LLP

When acquiring mixed-use freeholds in the UK, vehicle selection impacts tax liability and operational management.

Limited Company (Ltd)

  • Corporation Tax: Profits are subject to corporation tax rates rather than personal income tax brackets.
  • Mortgage Interest Relief: Unlike individual buy-to-let holdings, limited companies deduct mortgage interest fully from rental income prior to corporation tax calculation.
  • Asset Protection: Provides limited liability status for shareholders.

Limited Liability Partnership (LLP)

  • Pass-Through Taxation: Profits pass directly to members and are taxed at individual income tax rates.
  • Flexibility: Suitable for multi-investor syndicates pooling capital for commercial acquisitions.

Investors must review individual financial positions with a qualified tax advisor prior to completing corporate formations.

6. Capital Allowances and Tax-Advantaged Strategies

Commercial and mixed-use property acquisitions offer specific capital allowance opportunities that do not apply to standard residential properties.

Integral Features and Fixtures

  • Plant and Machinery: Capital allowances can be claimed on integral features within the commercial unit (electrical systems, HVAC, plumbing, lighting, security installations).
  • Pool Identification: Unclaimed capital allowances must be formally identified via a specialist capital allowances survey within the statutory acquisition window.
  • Stump Duty Land Tax (SDLT): Mixed-use properties attract non-residential SDLT rates, which are frequently lower than residential or additional-dwelling surcharge rates for equivalent purchase values.

7. Compliance and Trust Framework

Realty Packaging maintains strict adherence to regulatory standards across all sourcing and advisory operations.

Regulatory Registrations

  • Companies House: Registered corporate entity.
  • Information Commissioner’s Office (ICO): Data protection registration compliant.
  • The Property Ombudsman: Active member.
  • Insurance: Fully insured with professional indemnity (PI) coverage.
  • Anti-Money Laundering (AML): Registered with supervisory bodies.

Four Pillars Due Diligence Methodology

  1. Lease Structures: Review of tenant covenants, lease lengths, break clauses, and repairing obligations (Full Repairing and Insuring terms).
  2. Planning Permissions: Verification of existing use classes (Use Class E and residential C3) and statutory compliance.
  3. Building Condition: Structural surveys assessing roof integrity, damp mitigation, and service infrastructure.
  4. Operational Compliance: Inspection of safety certifications, electrical installation condition reports (EICR), and energy performance certificates (EPC).

8. Conclusion

84 Lee High Road represents a freehold mixed-use investment combining secure commercial tenancy income with residential rental streams. At the acquisition price of £650,000, utilizing a 75% LTV mortgage at 6% interest-only, the asset yields a net annual profit of £24,750 and a cash-on-cash return of 15.23%.

The location benefits from ongoing South East London regeneration and sustained tenant demand. For portfolio growth inquiries, contact the team at Realty Packaging.