5 Things to Consider When Buying an Office-to-Resi Conversion
There’s a growing trend to convert commercial buildings into homes. In an effort to address the continuing housing shortage, permitted development rights were updated so that property developers are able to convert offices (as well as shops and warehouses) into residential units without the need for full planning permission.
These kinds of developments can make perfectly good homes and many are situated in central locations that would be hard to buy in otherwise. But they don’t come without some potential pitfalls that you should be aware of if you’re considering going down this route. We’ve put together some useful guidance on what you should be looking out for when house hunting for a flat that used to be an office.
1. Is it actually a nice place to live?
Converting an office building to flats may sound like a straightforward construction exercise but creating a homely atmosphere in what used to be a cold commercial environment may not be quite so easy to achieve in real life. Think of modern glass and steel designs for office blocks and skyscrapers that were never intended for residential use. Often, floor planning is restricted on account of the existing building materials, and the creation of small studio apartments are the only viable result for the developer.
Older commercial buildings arguably offer more scope to be turned into pleasant living environments. They tend to have higher ceiling heights and are typically built more robustly. Historic buildings may feature beautiful architectural features that can be used to enhance their appeal as a home.
2. What’s the build quality like?
The quality of the conversion is a key factor in how well the property will perform as a home. Offices were never meant to be bedrooms, so the internal walls may be paper thin. Were they upgraded for noise protection? What about false floors or ceilings that were originally put into the building to hide office cables? Did the developer deal with this issue successfully? Check the communal areas as well as the flat itself. As a leasehold owner, you’ll be jointly responsible for the upkeep of the building.
Before you go ahead with any property purchase, getting a RICS surveyor to investigate the structure is always a good idea, and no more so than if you’re buying a non-standard home that was converted for change of use. Is there adequate insulation and other energy efficiency features? What about services such as heating, plumbing, drainage and electrics?
Finally, ask your conveyancer to verify that all the paperwork is in order, with all the correct documentation in place. Your mortgage company will want to see the current Land Registry status of the property, and the relevant planning documents, covenants and warranties relating to the conversion.
3. How small is too small?
Office-to-resi conversions can often be a little on the ‘bijou’ side. After all, the maximum profit for the developer lies in squeezing as many residential units out of the existing space as they can get away with.
The government has set minimum space standards for new homes of 37 square metres, which is not exactly generous but can serve as a useful benchmark. However, until recently, this rule didn’t even apply if the apartments were converted under permitted development rights, meaning many flats currently for sale could be even smaller!
Take a good look at the overall size, room layouts and proportions to see whether comfortable living would be possible. Would you be restricted in the type of furniture that would fit and the number of items you could have? Is there enough built-in storage? If there’s not enough room to swing a cat and you haven’t even moved your belongings in, the property is surely a non-starter.
4. Can you get a mortgage?
Home buyers should also be aware that office-to-resi conversions may be harder to get a mortgage for. Mortgage companies have strict lending criteria, especially where studio flats are concerned. Many won’t lend on properties under 30 square metres, and many others will insist on minimum national space standards being met for the property to be classed as habitable. Many lenders will require at least one separate bedroom in order to approve a loan.
Studio flats without a separate kitchen area, that are built from non-standard materials, or are located in 7+ storey high buildings, or in commercial or mixed-use buildings, can find their mortgeability further restricted. Properties that are sold with a short lease are also hard to get finance for.
There may be another complication too. New conversions are classed as new builds, regardless of the actual age of the building. This usually means a higher mortgage deposit will be required by the lender. First-time buyers in particular may struggle to raise 15% or more of the purchase price upfront.
5. Have you checked out the local neighbourhood?
Looking around the local area and checking out the amenities and general locale should be an essential part of your house hunting process. But it’s even more important when you are thinking of buying a home that was once an office building, shop or warehouse. After all, it’s not just the apartment that needs to tick all the boxes; the area needs to work for you too.
Is the property located in a largely residential area or are you in the middle of an industrial estate or near a noisy main road? Not all locations are suitable for residential conversion and, thankfully, some don’t even get built. Here’s an example of a planning application for change of use that was rejected by local planning officers because “future residents of the building would live in unsatisfactory conditions due to the level of noise generated by the industrial estate.”
High-rise buildings and homes above or next to commercial premises, restaurants or betting shops can also present a problem for mortgage companies who will see these kinds of properties as being harder to sell and present a greater loan risk.
Finally, many office buildings were originally designed for people commuting by car and may be in out-of-town locations or without any viable public transport links. If buses and trains etc are important to you, make sure you find out what is available. The same goes for shops and supermarkets, nurseries and schools, parks and open spaces, and leisure facilities.