1. Executive Summary
The subject property on Lee High Road, Lewisham (SE13), represents a high-performing mixed-use asset within one of London’s most significant regeneration zones. This freehold ‘shop and upper’ opportunity is currently fully let, producing a total annual rental income of £54,000.
Purchased at £650,000, the asset delivers a gross yield of 8.31%. Utilizing a 75% LTV interest-only mortgage at 6%, the investment generates a net annual income of £24,750 after mortgage servicing. This equates to a cash-on-cash ROI on the initial deposit of 15.23%.
The property benefits from a diverse income stream, comprising a ground-floor commercial unit on a long-term lease and three self-contained residential flats. Its location in the SE13 corridor places it in the immediate vicinity of a £1bn+ regeneration masterplan led by Landsec and additional major developments by Amro, ensuring long-term capital growth potential and sustained tenant demand.
2. Property Specification
The property is a substantial freehold mid-terrace building located on Lee High Road. The total internal area extends to approximately 1,865 sq ft, distributed across four levels.
- Address: Lee High Road, Lewisham, London SE13
- Property Type: Freehold mixed-use (Shop and Uppers)
- Commercial Element: Ground-floor retail unit (Use Class E), let to M.Y Hair Lounge
- Residential Element: Three self-contained flats (1 x Studio, 2 x 1-Bed Split Level)
- Unit Breakdown: Ground Floor Commercial – M.Y Hair Lounge; Flat A – Studio flat; Flat B – 1-bedroom split-level flat; Flat C – 1-bedroom split-level flat
- Existing Tenants: M.Y Hair Lounge in the commercial unit; three residential flats fully let
- Total Size: 1,865 sq ft
- Occupancy Status: Fully let
- Lease Terms: Commercial unit on a 10-year FRI lease from December 2019
The building retains its period facade while providing modernized internal accommodations. The split between commercial and residential uses provides a balanced risk profile, characteristic of the Realty Packaging investment model. For detailed information on our evaluation process, see our due diligence and analysis services.
3. The ‘Shop and Upper’ Investment Model
The ‘shop and upper’ model is a core pillar of strategic real estate investment in London. This structure combines the stability of commercial tenancies with the high demand and liquidity of residential rentals.
By acquiring the freehold of a mixed-use building, investors mitigate risks associated with single-sector downturns. The commercial component often provides long-term, predictable cash flow via Fully Repairing and Insuring (FRI) leases, where the tenant is responsible for maintenance and insurance costs. Simultaneously, the residential units offer higher per-square-foot yields and capitalize on London’s persistent housing shortage.
This specific asset on Lee High Road exemplifies this model. The diverse unit mix protects against total vacancy and provides multiple exit strategies. Further reading on this strategy can be found in our guide to London mixed-use property investment.
4. Commercial Component
The ground-floor commercial unit is occupied by M.Y Hair Lounge. The unit falls under Use Class E and is let on a 10-year FRI lease.
- Tenant: M.Y Hair Lounge
- Use: Ground-floor commercial unit (Use Class E)
- Lease Type: 10-year FRI (Fully Repairing and Insuring)
- Lease Start: December 2019
- Lease Expiry: December 2029
- Remaining Term: Approximately 3.5 years
- Monthly Rent: £1,200 pcm
- Annual Rent: £14,400 pa
The lease structure places repair and insurance responsibilities on the tenant for the commercial unit. The lease runs until December 2029 and provides contracted income over the remaining term.
5. Residential Component
The upper floors contain three self-contained residential units. The current residential income is £3,300 pcm, equivalent to £39,600 pa.
- Flat A
- Tenant: Existing tenant in place
- Use: Studio apartment
- Monthly Rent: £1,350 pcm
- Annual Rent: £16,200 pa
- Flat B
- Tenant: Existing tenant in place
- Use: 1-bedroom split-level apartment
- Monthly Rent: £1,000 pcm
- Annual Rent: £12,000 pa
- Flat C
- Tenant: Existing tenant in place
- Use: 1-bedroom split-level apartment
- Monthly Rent: £950 pcm
- Annual Rent: £11,400 pa
The residential units are fully let. No lease start dates or expiry dates were provided for the residential tenancies. Total residential income remains £39,600 per annum.
6. Lease Summary Table
| Unit | Tenant | Use | Monthly Income | Annual Income | Lease Start | Lease Expiry | Remaining Term |
|---|---|---|---|---|---|---|---|
| Ground Floor Commercial | M.Y Hair Lounge | Commercial unit (Use Class E) | £1,200 | £14,400 | Dec 2019 | Dec 2029 | ~3.5 years |
| Flat A | Existing tenant in place | Studio apartment | £1,350 | £16,200 | Not provided | Not provided | Not provided |
| Flat B | Existing tenant in place | 1-bed split-level apartment | £1,000 | £12,000 | Not provided | Not provided | Not provided |
| Flat C | Existing tenant in place | 1-bed split-level apartment | £950 | £11,400 | Not provided | Not provided | Not provided |
7. Financial Performance & Yield Analysis
The financial performance of the Lee High Road asset is characterized by a high gross yield and a substantial ROI on the invested capital. The following table summarizes the financial metrics based on the purchase price of £650,000.
| Financial Metric | Value |
|---|---|
| Purchase Price | £650,000 |
| Commercial Income (pa) | £14,400 |
| Residential Income (pa) | £39,600 |
| Total Annual Income | £54,000 |
| Gross Yield | 8.31% |
| Deposit (25%) | £162,500 |
| Mortgage (75% LTV @ 6%) | £487,500 |
| Annual Mortgage Interest | £29,250 |
| Net Annual Income | £24,750 |
| Net Monthly Income | £2,063 |
| ROI on Deposit | 15.23% |
The 15.23% ROI on the deposit is a result of the high gross yield relative to the cost of debt. This performance exceeds standard benchmarks for residential-only investments in London. For a comparison with other high-yield opportunities, view our Dalston investment report.
8. Market Context: Lewisham and the SE13 Corridor
Lewisham is currently the site of one of London’s most ambitious urban transformations. The SE13 area is benefiting from significant institutional investment, which is fundamentally changing the local economic landscape.
Regeneration Projects
- Landsec Masterplan: A £1bn+ redevelopment of the 1970s Lewisham Shopping Centre. This project will deliver 1,744 new homes, 661 student beds, and a 500-capacity music venue.
- Model Market: Landsec has appointed German Kraft Brewery to operate the revived Model Market, scheduled to open in late summer 2026. This will create a major social and culinary destination within walking distance of Lee High Road.
- Lewisham Retail Park: Amro is leading a £650m plan to deliver 1,452 rental homes and additional commercial space.
Transport and Demand
The property is exceptionally well-connected via Lewisham Station, providing DLR services to Canary Wharf and Southeastern mainline services to London Bridge, Charing Cross, and Victoria. The potential extension of the Bakerloo Line remains a long-term capital growth driver, with the route currently safeguarded.
These developments ensure a steady influx of young professionals and students (associated with nearby Goldsmiths, University of London), maintaining high occupancy rates for residential units.
9. Conclusion
The Lee High Road asset is a stabilized, high-yielding investment that aligns with the Realty Packaging focus on low-risk, high-return opportunities. With a gross yield of 8.31% and a net monthly income exceeding £2,000, the property provides immediate cash flow.
The ongoing £1.6bn+ total investment in Lewisham town centre provides a clear trajectory for future capital appreciation. The combination of a long-term commercial lease and high-demand residential units creates a resilient portfolio asset. Investors seeking entry into the London mixed-use market can view this report as a benchmark for high-performance SE13 assets.
