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Commercial to residential conversion – opportunity or money pit?

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Vacant shops and banks across Derbyshire are being brought back into use by converting them into living accommodation in a bid to revitalise town centres.

With property developers keen to capitalise on the changing face of the UK high street, the rate of office-to-residential conversions in England went up by nearly 40% between 2016 and 2017 according to estate agents Savills.

But, warns David Pratt, Building Control Manager at Derbyshire Building Control Partnership (DBCP), converting commercial space to residential accommodation has its challenges, not least the hidden costs, particularly where a listed building is concerned.

He explained: “The cost of labour could be considerably more as specialist skilled workers may be required to carry out the work in order to comply with residential and listed-building standards. It may also be that the property is subject to additional building requirements, such as Part L regulations, relating to the conservation of fuel and power.”

In Chesterfield in Derbyshire, two Grade II listed commercial buildings in the town centre currently have permission from Chesterfield Borough Council for conversion to residential dwellings.

In June 2018 Chesterfield Borough Council granted conditional planning permission to convert the town’s Grade 2 listed former magistrates’ court into 32 apartments.

Earlier this year Leverton UK was also granted planning permission by Chesterfield Borough Council to convert the historic Grade II listed 87 New Square into nine luxury offices. The boyhood home of Thomas Secker, a doctor, priest and Archbishop of Canterbury between 1758 and 1768 has been used as office space for a number of years.

In Derby City centre significant residential development activity is also taking place. Derby City Council has identified a number of commercial sites for conversion to residential conversion and has established a £6.5 million City Living Loan Fund to support developers in the provision of loan finance to bring forward schemes.

Developers are attracted by bargain prices of town and city centre commercial properties due to the saturated commercial market.

Developers also make small savings on Stamp Duty (it kicks in at £150,000 on commercial properties compared to £125,00 for residential purchases). And, in some cases, full planning permission to convert a commercial property to residential may not be needed.

In 2013 the rules changed allowing some kinds of commercial property to be converted to residential without the need for full planning permission, under something known as Permitted Development Rights (PDRs). Since October 2017 it has been possible to convert B1c (light industrial) to C3 (residential dwelling) without full planning permission.

Some councils have made it easier for developers. Derby City Council’s Core Strategy, launched in 2017, has made it possible to bring forward some of the stock of outdated offices in the city centre for residential uses without the costs and delays of the planning process.

However, “Building regulations approval,” warns David, “cannot be circumnavigated.”

To avoid a commercial/residential conversion becoming a money pit, David advises that developers need to develop a collaborative approach in the early stages of the scheme.

He explains: “Make sure you get everyone involved before you even submit any plans Having specialists like building control surveyors, architects and suppliers onboard talking to each other from the beginning of a project, before you have even started drawing up the plans, will make all the difference.

“This approach will save you money and time in the long run. You’ll have an accurate picture of costs and know exactly what you can and can’t do legally with the property. It could be the difference between making a healthy profit and not.”

DBCP’s team of building surveyors includes professionals who have years of experience spanning the entire construction spectrum, including the conversion of historic properties like the 16th Century Wirksworth Heritage Centre.

To find out more and ensure your commercial to residential conversion project has the best chance of success, please get in touch with the team at DBCP.

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