Tips for a Successful Commercial to Residential Conversion
Are you considering converting a commercial property into a residential space? This process can be a lucrative venture, offering you the chance to repurpose existing structures for the housing market. However, navigating the complexities of a commercial to residential conversion requires careful planning and execution.
In this blog article, we will share some essential tips to help ensure a successful commercial to residential conversion.
Understand Permitted Development Rights (PDR)
Before undertaking any conversion project, it’s crucial to thoroughly understand the permitted development rights specific to your property and location. PDR rules can vary between regions and property types. Ensure that your proposed conversion falls within the permitted guidelines to avoid legal issues, planning and building regs issues mid project.
Conduct a Feasibility Study
Perform a detailed feasibility study to assess the viability of the conversion project. Analyse the demand for residential properties in the area, estimate costs, and potential challenges. Understanding the local property market will help you make informed decisions throughout the process. Get an agent that knows the area on board early.
Seek Professional Advice
Consult with architects, planners, and other professionals experienced in these conversions. Their insights and expertise can be invaluable in identifying potential obstacles, optimising the design, and ensuring compliance with building regulations. A little spent here can save a lot later on.
Conduct a Structural Survey
Assess the existing building’s structural integrity through a thorough survey. Commercial buildings may have different structural requirements compared to residential properties. There is also a greater propensity to run into issues with asbestos, fire control and safety, access and unexpected listed property concerns. Identifying these issues early on will help you plan for necessary modifications and avoid costly surprises.
Plan Efficient Layouts
Optimise the use of available space by planning practical and efficient layouts for the residential units. Consider the target market and their preferences when designing the interiors. Adequate natural light, ventilation, and proper room dimensions are vital for creating appealing living spaces. It is worth looking at the plans carefully as small changes can have a much bigger impact on GDV, which is what you and any lender want.
Consider Sustainability and Energy Efficiency
Incorporate sustainable and energy-efficient features into the design to attract environmentally-conscious buyers or tenants. Investing in green technologies can reduce long-term operational costs and enhance the property’s value. It is essential that the units reach at least a ‘C’ EPC rating to ensure they are lettable and form a worthwhile purchase for investors. It will also help reduce your financing costs if you keep the units, green mortgages are a growing area.
Secure Exit Financing in Advance
Financing the development is one thing, financing the exit is the back up plan for when the development is complete. It pays to get this part sorted early as often there can be a commercial element to the unit or have commercial neighbours, who those are play a role in how simple any refinance will be. Getting an exit in place as a back-up if sale isn’t your preference (or plan) is best done early.
Monitor Construction Progress
Stay involved in the project and regularly monitor the construction progress. Regular site visits and communication with contractors will help identify and address any issues promptly. There is more scope for things to drift with conversions as the progress with works isn’t always as obvious.
Converting a commercial property into residential units can be a rewarding venture, both financially and environmentally. However, it requires careful planning, adherence to regulations, and attention to detail throughout the process. As Government policy moves to making better use of existing building stock these opportunities will increase.
By Dave Farmer