Converting a warehouse into residential
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Converting a warehouse to residential use is an area that is fast growing in popularity, especially in London where there is an abundance of empty warehouses combined with a severe shortage of homes. But why is this? Well, say you buy an empty warehouse for £200,000 that can then be split up into 5 homes, all selling at a minimum of £100,000 each; even with the associated costs of carrying out the conversion, we can clearly see how the smart developer can make a very tidy profit from these types of developments.

Of course, developers need to be willing to invest in ensuring that the conversion meets legal planning requirements. Wondering where to start? Firstly, you will need to deal with the required change of use from B8 storage and distribution class use to C3 residential.

How recent changes affect your conversion

Be super careful here – until the legislation changed last May, there was a temporary permitted development right allowing for these kinds of conversions to change their class use. This has not been continued. Now, that doesn’t mean that you can’t change the use of the building, it just means that you’ll need to get planning permission first.

It’s highly likely that for this type of conversion, you’re going to want to do some building work, such as build an extension or remove walls, which would require a planning permission application anyway. This permission needs to be granted before building/change of use works commence. Besides, you don’t want to waste your valuable time and money making changes if the permission isn’t granted!

Why a warehouse to residential conversion could be a great investment for you

We’ve already looked at how a relatively small investment can, in comparison, yield big returns once the conversion is complete. Some of the other advantages include:

• The government is keen to support and prioritise the reuse of empty buildings given the housing shortage crisis, especially in London, so even though planning permission for change of use is going to be necessary, there’s a good chance your application for this will be successful as demonstrated by the government’s own National Planning Policy Framework.

• More bang for your buck – most warehouses are much bigger than you’d be able to pick up a residential property for.

• The second home higher stamp duty doesn’t apply to non-residential and mixed-use properties.

• It’s unlikely that there will be delays caused by the conveyancing process brought about by those pesky property chains or the scourge of the residential property market, making it more likely to be a more straightforward transaction for you.

• Potential VAT exemption on the purchase if you’re able to issue a 1614D form to the seller.

• Further savings on VAT are available if building works are needed by you to convert the warehouse from commercial property to residential property. We’re talking a difference in payable tax of 20% down to just 5%.

What to watch for

While converting a warehouse into residential homes could easily be the best investment you ever make done right, if done wrong, like anything else, it can be costly both financially and legally. Some things to watch for early on in the planning process include:

• Get your experts on board early, including your architects and surveyors. Time and again we see developers try and cut costs by only bringing in the experts when things have already gone wrong. Getting your team of experts involved right from the get-go when you submit your planning permission application means that there’s less scope for issues and costly mistakes later on.

• When calculating expected profit, don’t forget to factor in the other costs you’ll have incurred before even reaching the planning permission and actual conversion stage, such as those costs involved in the purchase of the warehouse in the first place, such as solicitors fees and disbursements.

• If you’re new to this type of development, you’ll also want to consider how you’ll finance the project. Your typical buy-to-let mortgage tends to be cheaper than development finance usually proves to be.

• When it comes to the conversion work itself, ensure you get yourself skilled workers who know and understand what is required of them to complete the work to residential standards.

• Think about the access points to the property and how these might not only need to be altered but how they could affect the market value of the property and thus your return on investment overall. Other factors affecting the value of the property will be its location suitability for residential occupiers. Good selling points will be strong transportation links and having amenities close by including shops and schools. Being based too close to noisy pubs, clubs, bars and a never-ending stretch of takeaways tend to devalue most residential properties.

How AC Design Solutions can help

Being based in Wembley, London, one of our many specialities here at AC Design Solutions is knowing how to navigate the laws and rules around change of use applications which alter regularly and can vary from borough to borough throughout London.

We also have an experienced set of experts to help you get the planning permission you need to move onto the next stage of converting that warehouse you’ve got your eye on into those profit-yielding residential units.

Then there’s our highly skilled architectural team, structural engineers and interior design consultant London-based who are ready to put to good use their natural flair, talent and considerable expertise to design an imaginative, unique and fully functional home. This team knows how to use incredible pre-built features to amazing effect.

Whether it’s building regulations in Wembley, planning permission in Ealing or assistance in the whole procedure from start to finish, why not let our expert team take the hassle out of your conversion? Call AC Design Solutions today to find out more!