pandemic boosts redundant office conversion
The Covid-19 pandemic has forced us to take a good, hard look at how we live and work. With many people finding themselves working from home for the first time, and discovering that they can do so effectively, there is increased speculation as to whether we will ever return to the office-based culture on quite the same scale as in the past.
A new trend…
Certainly, the trend for commercial to residential conversions has gathered pace. MT Finance has seen an increase in applications for funding for converting redundant office space into residential flats as businesses abandon city and town centres in favour of smaller offices based further out in cheaper locations. If office workers don’t have to commute in every day of the week but will work from home more frequently, there simply won’t be the need for the same density of office space. And what better to do with it than to convert it to much-needed residential accommodation?
With large retailers abandoning city and town centres as they move online or go out of business, an increase in the volume of residential housing in, and around, our high streets will also be crucial in injecting life back into these hubs. Encouraging people to live in town centres will lead to an increase in demand for local shops and amenities, restaurants, bars etc, creating the buzz that has long been missing.
Changing commercial to residential
Permitted Development Rights were introduced to try to improve the planning approval process, allowing developers to change a building’s use without needing to apply for full planning permission.
The government recently announced plans to make it possible to change commercial buildings into residential use under permitted development; the new rules are expected to come in later this year. This will enable homes to be built more quickly within old commercial properties, further fuelling the trend for commercial to residential conversions.
How to fund commercial conversion
If you are purchasing commercial premises with the intention of turning them into residential under permitted development, it may not always be possible to wait for more complex long-term finance to be arranged. This may mean missing out on an investment opportunity, which is where bridging finance can be the solution.
For example, we recently helped a client who was looking to expand their beauty business and required funds to complete the purchase of a commercial property, consisting of a beauty salon and redundant offices. They intended to convert the redundant offices above the salon into residential flats, under permitted development.
In just under 4 weeks, we completed a £590,000 heavy refurb bridging loan at 65% LTV. Interest was retained at 0.89% over a 12-month term.
By taking out our heavy refurb bridging loan, the client was able to complete the transaction of their new business premises, allowing them to expand their beauty empire.
What’s more, the 12-month term will give them plenty of time to convert the top floor into residential flats and secure a mortgage against the improved property value and rental income. If they choose to refinance out of their bridging loan before the 12 months, they won’t be penalised for doing so as we do not charge exit fees or early repayment penalties.
Heavy refurbishment bridging loan
Since we were established in 2008, MT Finance have helped many clients in this position; arranging bridging finance to enable them to continue with necessary works and free up cashflow in their business.
Our heavy refurb bridging finance product is perfectly designed to help property investors and developers fund their commercial conversion, with speed and with minimum fuss. What’s more, we can also provide 100% of the build costs in stages to keep your expenses down.
Borrowers can apply as individuals or through limited companies and we will also consider all credit histories. With terms of up to 12 months available, bridging finance gives you plenty of time to complete your conversion project, before refinancing against the increase in value and any income from let units. As with all our loans, there are no penalty fees if you choose to pay off the bridging loan early, giving you maximum flexibility.
Please get in touch for more information as to how MT Finance can help finance your commercial to residential conversion plans. Call 02030512331 or fill in our contact form, and someone will be in touch with you shortly.