Case Study: One Mixed-Use Purchase, Three Strategic Outcomes

From One Deal, Three Outcomes: How a Strategic Investor Used Mixed-Use SDLT, Lease Restructuring, and a SSAS to Build Long-Term Value

Structuring smarter: one transaction, three assets, and a long-term legacy

Seeing Potential Others Missed

When James spotted a mixed-use freehold property for sale, comprising a house, a high-street hair salon, and a flat already sold on a long lease, he immediately saw an opportunity others might miss. It was not just about yield. It was about what the structure could become.

He used a combination of careful planning, professional advice, and well-established strategies to create three distinct outcomes from one purchase, all without triggering any additional SDLT charges or tax schemes.

Step One: Mixed-Use SDLT Advantages

The property included:

• A two-bedroom house let on an AST
• A ground-floor hair salon let at £15,000 per annum
• A flat above, already sold on a long lease

This configuration qualified the transaction as mixed-use. It was therefore assessed for SDLT purposes under the non-residential rates

Why the Entire Purchase Qualified as Non-Residential for SDLT

Although the property included both residential and commercial elements, the overall transaction was correctly treated as non-residential for SDLT purposes. This is because:

• The house was clearly residential, let under an Assured Shorthold Tenancy
• The shop was a commercial unit with a separate tenancy generating £15,000 per annum
• The flat above had been sold on a long lease, and was therefore excluded from the transaction subject to SDLT

The 5 percent Additional Dwelling Supplement (ADS) does not apply where the transaction involves mixed use. Similarly, (if applicable) the 2 percent Non-Resident Surcharge applies only to residential property.

HMRC’s SDLT Manual confirms that where a property includes both residential and non-residential parts, the entire transaction is assessed under non-residential rates. This applies even where the residential element is dominant in value, unless the residential and non-residential parts are wholly separate and capable of being acquired independently — which was not the case here.

As a result, James paid SDLT at the non-residential rates:

• 0 percent on the first £150,000
• 2 percent on the portion from £150,001 to £250,000
• 5 percent on the remainder

No Additional Dwelling Supplement applied. No Non-Resident Surcharge applied. The SDLT position was correct, defensible, and based on long-standing HMRC guidance.

Some conveyancers mistakenly believe only the shop element attracts non-residential rates and try to apportion the consideration between residential and non-residential parts.

This is incorrect unless:

• There are two distinct transactions (e.g. shop and house purchased under separate contracts), or
• The commercial element is demonstrably de minimis or ancillary.

That was not the case here. The hairdresser’s lease is a distinct, income-producing commercial asset with a separate tenancy, exactly the kind of non-residential use that shifts the entire transaction out of the residential regime.

James completed the purchase in a newly incorporated Family Investment Company (FIC), which provided a professional ownership structure and enabled the next steps to follow cleanly.

Step Two: Creating Long Leases

Shortly after completion, James instructed solicitors to grant two new long leases:

• One over the house
• One over the hairdresser’s shop

This created clean, separable titles, allowing for independent refinancing and planning.

Step Three: Selling the Freehold to Himself

Six months after completion, James arranged for the FIC to sell the freehold title (covering both leaseholds) to himself personally. Because the leases were now long-term, the freehold had little immediate value and was transferred at a modest, professionally valued price.

This gave James a personal capital holding outside the company, while rental income from the leases continued to flow into the FIC.

Step Four: Refinancing to Release Capital

Once the leases had stabilised, James refinanced the house leasehold within the FIC. The rental income supported the valuation, and the lender allowed him to withdraw most of his initial capital invested, which James had structured as a Directors loan to the company

Step Five: Transferring the Commercial Unit to His Pension

With the hairdresser’s leasehold now a standalone, income-producing commercial asset, James made an in specie transfer into his SSAS pension scheme. The transaction was:

• Completed at open market value
• Fully documented by trustees and professional administrators
• Compliant with pension rules on commercial property

This moved the shop into his pension, where it would continue to generate tax-free rental income.

Three Outcomes from One Deal

This single transaction resulted in:

• A refinanced, income-producing property held in a FIC
• A personal freehold title, cleanly extracted for capital gain
• A commercial leasehold pension asset within his SSAS

No tax schemes. No shortcuts. Just structured planning, based on clear ownership steps, professional valuation, and a long-term vision.

What Landlords Can Learn From James

James used tools that are available to any investor: a Family Investment Company, long leases, strategic refinancing, and pension planning. What made the difference was timing, structure, and commercial awareness.

If you are planning a purchase or restructuring, it may be possible to unlock similar opportunities in your own business, provided it is done with the right advice and for the right reasons.

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