Converting a Commercial Property

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Changing a commercial property into residential

It is becoming increasingly common to see properties that were once utilised by companies or industries transformed to become residential buildings. Did you know that, between 2016 and 2017, the number of these such conversions increased by a whopping 40 per 

There is clearly a huge market for such developments and, when you break it down, it’s obvious to see why. In major cities such as London, Manchester and Birmingham, many warehouses and former factories are located in prime real estate locations. These sites, which are often beside rivers and canals, and tend to be relatively central, offer developers the chance to transform a property that is either barren or underutilised, and turn it into a residential space that can not only give people somewhere to live but can truly revitalise an area.

However, while the benefits are obvious, there are still some challenges and hurdles that must be overcome to successfully turn a former commercial property into a residential one. The process is not always easy, but if you follow the rules and take heed of the advice we offer in this article, you will be in the best possible position to see success.

Let’s get the simple bit out of the way

The first question that you undoubtedly want to ask is ‘can I actually turn a commercial building into a residential property?’ The simple and straightforward answer is that yes, you can, but you might need planning permission to do so. This is especially true if you also want to introduce additional elements to the property or want to create adjoining buildings or structures. If this is the case, and you are looking to operate in the capital, you will be well advised to research rules and regulations around new build planning permission (London) to ensure everything is above board.

What exactly do we mean by planning permission?

In the most basic terms, planning permission is when a developer or individual asks the government if they are able to do extensive building work on a piece of land, or on a property that already exists. There may be some input from your local planning authority, but this will differ from area to area, so it is best to do some research or speak to an expert. Application prices tend not to be particularly expensive – they vary from around £50 to just under £500.

Are there any restrictions?

If you want to build in some very particular areas, there’s a good chance your application will be turned down. For example, if you want to convert a building that is in a conservation area, a listed building, a building located within an area of natural beauty or scientific interest, or one that is owned by the military or government, it is highly likely that your application will be rejected. There are some exceptions, but more often than not you will not be given access to operate in such locations.

Is planning permission always necessary?

Under official government rules introduced in 2013, planning permission is not always required for conversions. Some types of commercial properties are, legally, allowed to be altered to become residential buildings without having to require any form of written consent prior to work commencing. This is often dictated by ‘use of class’, which we discuss in greater detail below.

This ruling is known as Permitted Development Rights (PDRs), which fall under the remit of Parliament, and are not in any way associated with a specific area’s local authority. However, it is still worth doing as much background research as possible before deciding to go ahead and commit to a project, because the fines and penalties associated with breaking planning permission rules can be hefty.

What does the term ‘use of class’ mean?

The term ‘use of class’ determines what you are going to use a particular building for. Class A, for example, is a term that refers to shops and other types of retail property, Class B is related to offices, warehouses and other forms of industrial building, Class C is for hotels and homes, and Class D is places such as leisure centres or town halls.

You can see a full breakdown here

If the building is listed, what can be done?

It is possible to convert a listed building, but the process can often be long, convoluted, and there is no guarantee of success at the end of the application. You will certainly have to attain planning permission, and you might be required to present all of the associated architectural plans to your local authority to accurately showcase what you want to do, and what the end result will look like.

If you are allowed to get to work on a listed building, then be aware that you will probably have to adhere to strict standards, and you might also have to utilise more expensive materials than you initially budgeted for, just to ensure that the end product is in keeping with the listed building’s original aesthetic.

Is it cheaper to buy commercial property than residential?

There isn’t really a set answer to this question, but it is one that is asked frequently. It depends on a number of factors, from the location of the building, what state of repair it is in, how easy it will be to convert, how sought after it is, and how easy the seller believes it will be to gain planning permission for any future conversion. Every case is liable to be different.

What sort of costs are associated with buying a commercial property?

You will, in general, have to contend with the same costs that are associated with the purchase of a residential building. You will undoubtedly have to pay stamp duty, though it should be noted that while this comes into effect for residential properties that cost upwards of £125,000, it only becomes applicable for commercial buildings should the cost be north of £150,000.

You will also have to pay various other costs to ensure that everything is above board. This means fees for solicitors, lawyers, surveyors, and whatever other experts are required to ensure that both the purchase and the subsequent conversion work complies with all legal requirements. After that, the costs will be very much dependant on the state of the building in its current guise, and what you want it to look like upon the project’s conclusion. This means accounting for soundproofing, insulation, windows, electrics, drainage, and various other things that will be required to ensure people can live in the building comfortably.

If you want to discover more about the process of transforming a commercial property into a residential one or want to understand how you could benefit from such an undertaking, get in touch with us contact-us

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Suresh Babu
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