Case Study 6: Lease Re-Engineer.
This next project takes us back to Chester—just outside the city walls this time. It’s a classic Georgian townhouse, and at first glance, looks strikingly similar to our Watergate Street deal. But this one’s a mixed-use property: a retail unit on the ground floor and four flats above. A true urban goldmine, hiding in plain sight.
What made this deal so interesting wasn’t just the numbers—but the legal quirks, tenancy misunderstandings, and a touch of tax optimization that made it possible to extract significant value. If you’re a property investor looking to buy mixed-use properties, this is a must-read.
Sourcing the Deal: Property Filter & Due Diligence
I found this through Property Filter, a game-changing platform that helps you track undervalued and overlooked listings. This was actually the first deal I spotted through it, and it immediately jumped out.
The property had been through auction a couple of times—offers over £400,000—but had failed to sell. It was now listed for £450,000, sitting stale, and everyone was ignoring it.
Why? Because three of the four flats had tenants on 1990s tenancies, with rents between £300–£350/month. In Chester, one-beds go for £700+ easily, so this looked like a legal and financial headache. Most investors walked away.
But here’s the thing: I dived into the legal pack, reviewed the SCPIs, and found a mobile number for the vendor. I rang him directly.
Direct to Vendor Again: A Landlord Who Wanted Out
The seller was an elderly landlord in his 70s, with a sizable portfolio on the East Coast. Chester was an “outlier” property for him, and he was done managing it. Driving across the country to deal with maintenance and low rents? No thanks.
He explained that the tenants were on protected tenancies, and that’s why it hadn’t sold.
But here’s where legal detail matters: after reviewing the documentation, I found all three tenancies were labelled as ASTs, and—crucially—they had signed Section 20 notices.
⚠️ Quick legal context: ASTs became the standard after the 1988 Housing Act. But between 1989 and 1996, a Section 20 notice had to be served for the tenancy to be classed as an assured shorthold tenancy. All these tenants had signed them—meaning they were on standard ASTs, not protected tenancies.
The vendor didn’t know. The tenants didn’t know. But I did—and that meant I could legally issue notice and bring rents to market level if I chose to.
Ethical Considerations & Win-Win Negotiation
Even though I could have evicted and replaced tenants, I didn’t. These tenants had been in place for over 25 years. So instead, I approached them directly, explained the situation, and offered a rent increase to below-market levels—in exchange for signing new ASTs and tearing up the legacy contracts.
That made everything cleaner legally, improved cash flow, and kept everyone housed with dignity. A true win-win.
The Numbers: Unlocking Value from a Legal Misunderstanding
Here’s how the figures broke down:
Purchase Price: £345,000
Refurb & Costs (GDC): ~£65,000 at the time; now closer to £410,000 all-in
Current Rent Roll (2025 projection):
Flats (2 on short-term lets, 2 on ASTs): ~£2,800/month (AST) or higher on average from SA
Retail Unit: £2,500/month (secured after a failed lease fell through)
Total Market Rent: ~£5,300/month or £63,600/year
Using Stamp Duty Relief (Before It Vanished)
When we bought this, we utilised Multiple Dwellings Relief (MDR), which allowed us to reduce our stamp duty bill significantly—down to 1% in this structure.
⚠️ MDR is now ending (or has ended by the time you read this), but understanding SDLT structures—from MDR to mixed-use rates, VAT exemptions, capital allowances, etc.—can easily add £10K–£100K to your bottom line per deal.
I go deep into this with my clients in Property Cash Flow Accelerator, because honestly, tax strategy is where a lot of investors leave money on the table.
Valuation and Refinance: Portfolio Power
We originally bought this in cash, but our strategy was always to refinance for portfolio leverage—using this to help fund the next purchase.
We had a RICS valuation done for Lloyds (even before refurb was complete and before commercial tenancy was secured), and they valued it at £530,000—based on passing rents, not full market potential.
Now, with tenants in place and the retail unit let at £2,500/month, I estimate the property would value at:
8% yield: ~£720,000
9% yield: ~£640,000
10% yield: ~£576,000
So we’re sitting on a likely uplift of £200K–£300K over 18–24 months. That’s the power of knowing how to read tenancies, act ethically, and use tax-smart structures.
Lessons from This Deal
1.
Always Read the Legal Pack
The difference between “protected tenant nightmare” and “standard AST opportunity” was a single piece of paper—the Section 20.
2.
Tenant Management Can Be Ethical and Profitable
We didn’t evict anyone. We negotiated in good faith, increased rents modestly, and offered modern tenancy agreements. Everyone won.
3.
Don’t Overlook Mixed-Use Deals
This building gave us strong rental yield, capital uplift, and tax advantages because of its mixed-use nature. If you’re only chasing HMOs or SA, you’re leaving money on the table.
4.
Know Your Tax Game
MDR, mixed-use SDLT rates, and capital allowances are not “accountant stuff”—they’re profit levers. Learn them.
Want to Learn This First-Hand?
This deal is exactly the kind of strategy we dissect inside the Property Unicorn Club and the Property Cash Flow Accelerator.
These programs are where I teach serious investors how to:
Read between the legal lines
Unlock hidden value in tenancies
Structure purchases to maximise lending and reduce tax
Build cash flow and capital growth simultaneously
👉 Join the Property Unicorn Club today to start mastering the deals that other investors walk past.
Buying properties like this isn’t about luck—it’s about knowing what to look for, what to ask, and how to structure. This Chester mixed-use was overlooked for years, but with the right lens, it became a six-figure uplift and a launchpad to the next project.
Strategic investing beats speculation every time.
Stay focused,
Rob