Flat purchase - above commercial premises - problems?

snezhinskproject

Hi all,

I am a first time buyer in London and have had an offer on a flat accepted:

- very nice area (Putney);
- stunning flat;
- gated modern development;
- £401K price (33% deposit) appears ballpark right on the basis of sale in 2005 for £337K;

BUT

- above a shop ( basically the gated development entry is at the rear, the back windows of the three flats are above a small parade of "posh shops". The one mine is above is a posh kitchenware shop. Flat is split above the first and second (top) floor)

Basically, I'm trying to work out what the problems are. It sounds dodgy when you say it's above a shop but the reality is from a practical living point of view it is really not a problem, as you know the instant you enter and step into the flat. Major attractions of not having neighbours below or above, proper purpose built flats not crappy Victorian conversions, etc.

However, instant response of the mortgage broker (L&C) on putting the details is "uh oh ... above commercial premises". And it therefore immediately rules out some of the mortgages I was quoted previously on properties I didn't eventually go for. The difference in rate (on a 2 year fix) is 3.79% as opposed to 3.65%, and there is less selection so am not able to get e.g. proper overpayment facility.

Would be really grateful for any thoughts. I wonder whether it makes it more difficult to sell (you will probably say I have just answered that myself). I did wonder why it had been on market for 12 weeks, and had assumed the seller was just being stubborn on price (advertised at £410K).

I may be being very wet behind the ears here, but I'd rather be laughed at here than find out the hard way having committed myself!

Many thanks.

snezhinskproject

PS I think the freeholder is, or is connected to the original developer (redeveloped in 1999), and is responsible for managing all the properties including the retail units and all the leases, if this helps.

Fire_Fox

Just because it is a posh kitchen shop now, doesn't mean it will be a posh kitchen shop in the future especially given that we are in a recession. I would find out council planning policy for the area, how likely they are to agree a change of use. Be aware that planning decisions can be overturned on appeal - I now have a betting shop (A2) and coffee house (A3) in my street despite the area being designated retail (A1) in the city's masterplan.

Old_Git

how would you like a 24 hour chippy ,Indian or Chinese .

Wobblydeb

When I was buying an investment property a few years ago I found a lovely (cheap!) 3 bed flat above some shops. Would have been easy to rent and given great yield.

BUT...... I couldn't get a mortgage on it.

There were a few lenders willing to consider it, knowing it was above a stationery and a florists shop. Then they discovered a butchers was the next shop along and wouldn't proceed.

May not be comparable - that was in 2003 and a long way from London ..... but lenders seem sticky about commercial premises, particularly anything food related.

Even if you love the flat and the location, this will limit the market you can sell on to.

itsakidsworld

Please be careful with this proposed purchase- a shop is a shop and already examples are coming along which are not favourable! My friend purchased a beautiful flat in a stunning location with incredible views and he felt like he had landed in paradise. Then fast forward a couple of years- a change in planning(thanks!!) and the shop unit directly below his block but in front gets approval for a fish and chip shop take away!! To put the knife in further they then install the extractor directly outside his window!! He now hates fish and chips!!!!

Cover your back with any property purchase and if any negatives come into the equation think seriously about purchasing. An option(only an idea) if you really want the property is to have a clause written into your contract that any change of use to the shops to fish/chips, indian or anything that emits a smell will result in compensation to you from the freeholder- just a thought and not sure on legal issue but why not cover your back?

seven-day-weekend

Your posh kitchen shop could become a shop selling electric guitars and drum kits or noisy motorbikes or garden machinery or a pet shop without needing ANY change of use permission. The new business could just move in and start trading. And if permission is needed, and granted, it could become a hot food take-away or a massage parlour.

That is why people are dubious about buying flats above commercial premises.

ILW

There are also all sorts of issues about leasehold extensions etc if the block is part commercial.
Also buildings insurance can be very expensive depending upon use.

RecoveringAlcoholic

Buying flats above kebab shops is recommended.





:beer:

sjcollett

The above comments are all very valid and true. however, if you do decide to proceed I think Northern Rock offer these type of morgages. But do be aware when you come to resell the market is more limited as the funding is more limited

Wine_of_the_World

I lived above a shop - this was great because after 5pm there was no noise whatsoever from downstairs and we didnt have to worry ab out making noise and disturbing anyone. Plus we were up a bit higher, and didnt have to worry about passers by looking in through out windows.

However I also lived above an empty shop, and even an empty shop can cause problems becasue mice where breeding in the shop, and kept infesting our house!

So, while renting if fine, I dont think I would buy above a shop.