Vacant commercial properties could be seen as an opportunity for an investor to purchase and convert into residential properties in some cases. Permitted development rules make this process much more straightforward, but it’s essential to understand what these are before you get started.

What is permitted development and what is it used for?

Permitted development is a set of regulations that allows certain types of building work to be carried out without planning permission. This includes extensions, loft conversions, and use changes (for example, converting a shop into a house).

Converting commercial properties into residential ones falls under these rules, but there are some caveats that you need to be aware of. For example, the property must have been used as commercial premises for at least a year before you can apply for permission to change its use.

What are the restrictions on permitted development conversions?

You need to be aware of a few restrictions if you’re thinking of converting commercial properties into residential ones. First, the property must have been used as commercial premises for at least a year before you can apply for permission to change its use.

Second, the conversion must not result in the loss of any floor space. So, if you’re converting a shop into a house, you’ll need to make sure that the overall floor space of the property doesn’t decrease.

Third, the conversion must not increase the height of the property. This is usually not an issue, but it’s something to bear in mind if you’re thinking of adding a loft conversion.

Fourth, the conversion must not result in the property becoming unsuitable for its original purpose. So, if you’re converting an office into a house, you’ll need to make sure that it can still be used as an office should the need arise.

Finally, the conversion must not result in creating any new homes that would be considered “household units”. This means that you can’t convert an office into flats.

How do you go about converting a property using permitted development rights?

The first step is to check whether the property you’re interested in converting is eligible for permitted development. This can be done by looking at your area’s relevant planning policy documents.

If you’re still unsure, you can also contact your local planning authority and ask them for advice.

Once you’ve established that the property is eligible for permitted development, you’ll need to submit a Prior Approval application to your local planning authority.

This is a simple process and can be done online or by post. You’ll need to include some basic information about the property, such as its address, the type of conversion you’re proposing and a floor plan.

You may also need to provide additional information, such as an Environmental Impact Assessment.

Once you’ve submitted your application, the local planning authority will have 21 days to decide. If they’re happy with your proposal, they’ll send you a notice of permission.

If they’re not happy with your proposal, they’ll send you a notice of refusal.

If you don’t hear anything from the local planning authority within 21 days, you can assume that your application has been approved.

Once you have permission from the local planning authority, you can start work on the conversion.

You’ll need to make sure that the work is carried out following the permission that you’ve been granted. If you make any changes to your proposal, you’ll need to submit a new application for prior approval.

You should also bear in mind that permitted development rights can be removed from a property by what’s called an Article 4 Direction.

This is usually done if there are concerns about the impact of a proposed conversion on the local area. If an Article 4 Direction is in place, you’ll need to apply for planning permission before going ahead with the conversion.

You can check whether an Article 4 Direction is in place by contacting your local planning authority.

Converting commercial properties into residential ones can be a great way to add value to your portfolio. However, it’s essential to be aware of the restrictions in place.

Make sure you do your research and get permission from the local planning authority before you start work on any conversion.

If you don’t, you could have to undo all of your hard work.

What are the benefits of using permitted development to convert a property?

Several benefits come with using permitted development to convert a property.

The first benefit is that it’s a quick and easy process. You don’t need to go through the hassle of applying for planning permission, which can be a time-consuming and expensive process.

Secondly, using permitted development can add value to your property. This is because residential properties are usually worth more than commercial ones.

Thirdly, converting a property using permitted development can be a great way to increase the number of homes. This is especially beneficial in areas where there is a housing shortage.

Finally, converting a property can be a great way to revitalise an area. This can bring new life to a property that might otherwise be left empty and unused.

Overall, many benefits come with using permitted development to convert a property. However, it’s important to be aware of the restrictions that are in place.

Make sure you do your research and get permission from the local planning authority before you start work on any conversion.

Are there any drawbacks to using permitted development?

A few drawbacks come with using permitted development to convert a property.

The first drawback is that you might not be able to get planning permission if an Article 4 Direction is in place. This is usually done if there are concerns about the impact of a proposed conversion on the local area.

Secondly, authorities can remove the permitted development rights from a property. This means you could start work on conversion, only to have the permission withdrawn later.

Thirdly, you might need to submit a new application for prior approval if you change your proposal.

Fourthly, there are usually some restrictions on what you can do with the property once it has been converted. For example, you might not be able to sublet the property or use it for commercial purposes.

Overall, a few drawbacks come with using permitted development to convert a property. However, it’s important to be aware of these before starting work on a project.

How to finance a conversion?

For these types of projects traditional bank won’t provide the required finance instead specialist lenders generally available through brokers are available to help. Bridging Finance is commonly used to purchase the asset and then additional finance maybe able to be raised to help with the renovation costs. Bridging Finance can have a variety of uses:

Chain Break – A bridging loan can also help when there is a gap in the property chain between buying and selling properties. It may be necessary to purchase a property to avoid missing out but there is not the time available to sell your current property to raise the required funding.

Buying at Auction – Upon winning the bid at an auction you generally have to complete within 28 days, so you may not be able to raise a standard mortgage in this time frame, so a bridging loan can be used to complete on the purchase.

Uninhabitable Properties – Standard mortgages require the property to be in a habitual form – i.e. have a kitchen, bathroom, heating etc. – but some properties are run down and due to their poor condition they are classed as uninhabitual and not suitable security for traditional mortgage lenders. In this situation bridging finance could be a solution.

Change of Use – This is where you plan to make extensive changes to the building, so for example change an office block into flats or convert a residential house into a HMO (House of Multiple Occupation). Due to these types of changes high street banks will not lend, whereas bridging loan lenders will consider this.

If you would like to discuss finance options, be that bridging finance or mortgages – please get in touch on 0203 725 5830 and we would be happy to help.

DISCLAIMER: These articles are for information only and should not be construed as advice. You should always seek advice prior to taking any action.