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  • Writer's pictureNFC Homes

Can you use commercial property as residential?

With many commercial properties appearing on the market each day and residential property prices rising, people are looking for non-conventional solutions to create more affordable properties. Historically, using commercial property as residential had many restrictions attached to it. In recent years, however, it has become more feasible.

As a result of the 2015 General Permitted Development Order (GPDO) amendment, it is now possible to convert a commercial property into a home. Planning permission also isn't required if the conversion is covered by permitted development rights, or if the property will be converted within the same class.

The government categorises commercial properties in different "classes", so whether you'll need planning permission will depend on this. Ensure that you find out which class your property is in before undertaking any conversion work. Failing to do this may mean that you encounter problems in future regarding planning permission. The rules can be complicated, so often it's best to consult the guidance of a professional. If you'd like to seek assistance regarding commercial property, our team are always on hand to discuss converting commercial property into residential property, so feel free to get in touch.

Benefits of converting commercial property

There are many benefits to converting a commercial property. For instance, commercial properties are often close to amenities and transport links. Since many retailers have turned to online sales, retail properties are often available at a lower price and give investors good value for money.

Commercial properties are great starting points for those looking to create houses of multiple occupancies (HMOs). These are great for investors as they generate more revenue than single-let properties.

In what instances are you unable to convert a commercial property?

Some circumstances will prevent a conversion. These include if the property is located in a national park or conservation area, an area of natural beauty or scientific interest. Additionally, if the building is in an area that is considered a safety hazard or where military explosives are handled or stored, then a conversion will not be possible.

Converting listed buildings

Although converting a listed building is possible with permission, it can be quite a difficult task. It will usually require the owner to complete the full planning permission process and may even require architectural drawings or the planned conversion to be provided. As with all listed buildings, making changes may require the use of certain materials and for the work to adhere to a standard in which the preservation of the building's history is the main priority.

Converting a commercial property can come with substantial costs, so it's important to familiarise yourself with what to expect.

Cost considerations

The costs of converting a commercial building can quickly add up, so you must include these in your budget. This may include planning permission fees, solicitors fees, surveying, and construction fees covering things such as residential drainage, electrics and plumbing. Stamp duty will also need to be paid on the property.

Safety and liveability considerations

Before a commercial property is deemed fit for residential use, several safety standards will need to be met. These include safely removing any hazardous materials and ensuring the property adheres to residential plumbing, electrical and gas regulations.

If you are planning to let the property, it's also important to consider whether the property would be desirable to tenants. For example, if the property lacks parking facilities, whether noise pollution is a problem and its distance from the nearest school.

Funding the property

Mortgages surrounding residential properties can be a little more complicated. Although you may still be able to obtain a mortgage, you may need to take out insurance to cover the building while it is being renovated under the mortgage terms. You may also apply for a self-build mortgage. This can be beneficial for conversion but may mean you need to pay out the conversion costs upfront before being reimbursed. This will, however, depend on the terms that you agree with your broker.

Common issues with commercial property conversion

If you fail to do your research before taking on a commercial conversion, you may find yourself in unexpected situations. Commercial properties can come with structural issues that will need to be addressed before they are deemed liveable, so it's always best to identify these before committing to buy the property.

Ensure that you consider all costs that may arise, including any structural repairs and that you have adequate funding in place. Conversions can also sometimes take much longer than expected, so ensure you consider this in your planning. You may also need to work with specialist commercial property surveyors and fund several commercial building surveys, so it's important to consider this in your budget.

NFC Homes specialise in converting commercial property into residential property, with more than 15 years of experience. Contact us today for a free evaluation of your property.


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