Case study
How we helped restructure and finance a mixed-use property with four holiday-let apartments above a restaurant
Case summary:
Client type: Property investor
Property: Mixed-use building
Residential element: Four self-contained flats
Commercial element: Ground-floor restaurant
Intended use: Holiday-let accommodation
Ownership structure: Residential lease with freehold transferred into an SPV
Background income: Newly established restaurant business
Main challenges: Mixed use & title restructuring
The client:
Our client had purchased a mixed-use property comprising four flats above a commercial unit.
After completing a substantial refurbishment, he converted the ground floor into a restaurant and created four self-contained flats upstairs, which he intended to operate as holiday lets.
The situation:
The property was still held under a single title, but it would need to be separated into separate residential and commercial elements to avoid the expensive interest rates and fees that are offered for commercial and semi-commercial products.
This required new leasehold titles to be created for the upper and ground floors, with the freehold entity itself then transferred into a special purpose vehicle. The funding therefore needed to work alongside the proposed legal structure while also accommodating the property’s mixed use and intended short-term letting model.
The property challenge:
Although the building contained four self-contained flats, they sat above an operating restaurant and formed part of a mixed-use property.
This ruled out many conventional buy-to-let lenders, particularly those uncomfortable with commercial premises beneath residential accommodation or properties requiring a more specialist valuation approach.
The title structure challenge:
The freehold title needed to be restructured, with separate leaseholds created for the residential and commercial parts of the building.
The chosen lender needed to understand the proposed arrangement and be comfortable taking security over the newly created residential lease rather than assessing the property in its existing form.
The holiday let challenge:
The four apartments were intended to operate as holiday lets rather than being occupied under standard assured shorthold tenancies.
This further reduced the number of suitable lenders. The application needed to demonstrate that the proposed letting model was realistic, that there was local demand for mutiple holiday lets in concentration, and that the anticipated rental income could support the required borrowing.
Our solution:
We assessed the property, intended letting model, ownership structure and client’s income position together rather than treating each issue separately.
The case required a specialist lender willing to consider:
Four holiday-let apartments within one building
Residential accommodation above commercial premises
A newly created leasehold title
Transfer of the freehold entity into an SPV
Projected holiday-let income
A client whose restaurant business had only recently begun trading
We presented the proposed title structure and commercial background clearly from the outset, ensuring the lender understood how the building would be divided, which part would form its security and how the four apartments would be operated.
Rather than relying on established restaurant accounts that did not yet exist, we focused the application on the overall strength of the proposition, the completed refurbishment and the sustainable income potential of the holiday-let accommodation.
Our client’s outcome:
We identified a lender able to assess the case in its entirety rather than rejecting it because one element fell outside standard criteria.
This allowed the client to progress the legal restructuring of the property, establish the freehold element within the SPV and secure funding against the four holiday-let apartments—despite the mixed-use building, newly created title and limited trading history of the restaurant business.
The background income challenge:
An additional complication was the client’s background income, which many lenders would expect to see alongside the anticipated holiday-let income.
His only non-property-related earnings now came from the restaurant downstairs. However, having refurbished and opened it within the previous year, he did not yet have a full year’s accounts, let alone the two-year trading history many lenders would ordinarily require.