A mixed-use town-centre block was circulated as an income-producing opportunity with ground-floor commercial space, nine self-contained residential units and potential to create value through rent reviews and individual title sales.

Although the £950,000 guide sat just below Divitiae's current advertised £1m acquisition threshold, the estimated total capital requirement exceeded £1m. It is included because it demonstrates exactly why purchase price alone is not a reliable measure of deal scale.

The location and identifying details have been withheld. Figures have been rounded to protect confidentiality. This was a preliminary commercial screen using the information available at the time, not a valuation, legal opinion or recommendation to any particular investor.

Guide price
£950,000
Passing gross income
£90,240 p.a.
Headline income ÷ guide
9.5%
Estimated total capital
£1.03m
Aggregate break-up value
£1.04m
Pre-sale-cost buffer
~£10,000

The headline pitch

At guide price, passing gross income represented approximately 9.5% of the purchase price before operating costs. The stated value-add routes were overdue indexed rent reviews and the prospect of selling the residential units individually.

Neither point was worthless. The problem was that the brochure-level story did not yet include the capital, legal work, operational costs and execution risk required to realise it.

1. The acquisition required more than the guide price

The preliminary capital allowance reached approximately £1.03m after roughly £37,000 of mixed-use SDLT, conveyancing, surveys, legal rectification and identified works were included. On that basis, the passing gross income represented approximately 8.8% of total capital before voids, management, repairs, insurance and other operating expenditure.

Headline income on guide price£90,240 ÷ £950,000 ≈ 9.5% gross
Headline income on estimated total capital£90,240 ÷ £1,030,000 ≈ 8.8% gross, before operating costs

2. A title issue introduced lending and exit friction

The documents indicated an inconsistency affecting one occupational lease. The screen therefore allowed approximately £5,000 for specialist legal work and potential rectification, while recognising that cost was only part of the risk. The more important questions were whether the issue would delay lending, restrict a clean unit sale or require cooperation from another party.

Until a solicitor confirmed the defect, the remedy and the timetable, the clean title-split narrative remained an assumption.

3. Energy performance required a real capital allowance

One unit presented an EPC concern. The underwriting included an £18,000 allowance for energy-efficiency and related works rather than assuming the issue would disappear before completion.

The applicable legal obligation, works, exemptions and timing would require confirmation by the appropriate property and legal professionals. For screening purposes, the commercial point was simpler: the model needed a prudent allowance while the evidence remained incomplete.

4. The break-up strategy had almost no protection

Local resale evidence suggested studios around £80,000–£85,000 and one-bedroom units around £100,000–£105,000. The resulting aggregate break-up estimate was approximately £1.04m.

Break-up buffer before selling costs£1,040,000 estimated value − £1,030,000 estimated total capital = approximately £10,000, or less than 1% of capital employed

That £10,000 was not profit. It was the remaining gross headroom before sales agency, legal costs on individual disposals, finance, voids, timing slippage or any softening in achieved prices. A small change in one assumption could eliminate it entirely.

Divitiae screening outcome

Do not progress at the guide price.

The headline income did not compensate for the combined title, works, mixed-use management and exit-liquidity risk. The break-up route offered insufficient downside protection on the evidence available.

What could have changed the conclusion?

A sufficiently lower acquisition price, verified evidence that reduced the works or title allowance, stronger local resale evidence, or a substantiated net-income improvement could have justified re-screening. “Rejected” did not mean the building could never work. It meant the opportunity did not survive the filter at the circulated price and on the available evidence.

The point of the filter

Most acquisition time is lost before formal due diligence begins: chasing documents for opportunities whose margin was too thin from the start. The Divitiae Filter is designed to identify those weaknesses early and explain the case against proceeding as clearly as the case for it.