Flat conversion of period house in East London

LimeSpouse

Just a quick question...bascially me and a couple of school friends brought a 4 story house in East London recently with the plan to convert to two flats.

Property cost 450k 2 flats independantly valued at 600k + by estate agents. The work would be minimal. Our mortgage is 85% LTV with Britannia. We called them to check it was OK (rather stupidly we hadn't even considered this to be a problem before) but low and behold they have said no. In fact, they've said that no matter what the LTV had been they would "never" allow a property to be converted in this way.

Obviously we are gutted and trying to think of a way out - we are not locked into Britannia and can move if required. Does anyone have any ideas on a way forward?

RedTomato

I imagine you'd probably need a commercial rather than residential mortgage for this especially as you are planning to create two flats that will presumably sell at different times.

First thing you are going to need to get a new mortgage is planning permission - how far down the line are you with this? I do hope you looked into this before buying as I presume you know councils have a lot of rules on the creation of extra dwellings, some, for instance might say no more than 20% of houses in a street can be converted.

Also, I wonder have you been seduced by property !!!!!! T.V. to think that you can chuck in an extra kitchen and bathroom and a few flimsy walls and walk away with half a million? There are very strict rules on the quality of build required, soundproofing etc. - this is why you see a lot of housing associations in London selling their older stock at auction when it becomes empty because it is not worth it for them to bring their old stock up to new building regs standards. Off the top of my head, you will have to think about creating utilities for which you will be charged handsomely under developers', not owners' rates by the utilities companies.

Sorry if this is all old news to you but having gone ahead with a standard residential mortgage I have presumed that you haven't done a great deal of research for this project.

poppysarah

Have other properties been converted on the same street? Your option would be to get a different type of mortgage - one for a developer maybe?

Doozergirl

You need commercial funding. No residential mortgage lender would be happy with such a commercial development which will devalue the house greatly before any value is added.

I'm surprised that you don't think there's much work involved in a conversion. As soon as you create a new dwelling it needs to meet building regulations for new dwellings - they far far exceed your Victorian property and whilst it still looks feasible on paper, there's no such thing as a simple or a cheap conversion.

Suggest speaking to one of the business banks or looking for a development mortgage and start doing some proper homework as you've started digging quite an expensive hole for yourself with the mortgage blunder

neverdespairgirl

LimeSpouse wrote: »

Just a quick question...bascially me and a couple of school friends brought a 4 story house in East London recently with the plan to convert to two flats.

Have you checked the local authority housing plan? Lots of London boroughs are anti the splitting up of larger units into flats, now.