Legal costs for changing a 'commercial' building to a residential one

t1redmonkey

First off, forgive me if I'm very naive on this topic, but I've seen a property I really like which was up until recently, being used as offices.  It's basically an old Victorian house which someone could move into and live in, the only thing I'd really have to do with it is get a shower/bath put in, as there are only WC's at the moment, so no proper bathroom.

I'm a bit confused on how difficult/costly the process would be to buy this building, and turn it back into a residential property.  I'm not talking about any conversion/building work, just the actual legal costs. 

I contacted the council and was told change of use cost is £460 per residential unit proposed and they used the example of 10 flats = £4600, though I'm thinking because I only want to turn it back into a single house, I'd only have one lot of £460 to pay?

The building also has a NNDR of just over £10k.  Would I have to pay anything here, or if I got the change of use application submitted as soon as I purchased, could that avoid/reduce having to pay this?

Any advice is much appreciated, thanks.

user1977

Legal costs to do what, exactly? You would have conveyancing costs for the purchase (which are likely to be at higher rates than for a residential purchase), you pay the council for your planning application (and any building regulations approval which your works require), but you don't need to involve a lawyer after you buy.

t1redmonkey

user1977 said:

Legal costs to do what, exactly? You would have conveyancing costs for the purchase (which are likely to be at higher rates than for a residential purchase), you pay the council for your planning application (and any building regulations approval which your works require), but you don't need to involve a lawyer after you buy.

Effectively I'm just asking what costs there are if I want to buy a 'commercial' property to live in, considering it doesn't really need any work doing to it. 

As I said in my opening sentence, I don't know what costs there are at all in this process.  I have owned several houses in the past, so I am aware of all the conveyancing costs, and all the standard moving costs if it was just a normal residential property.  However I don't know what costs/processes are different if it's a commercial property that I want to buy to live in.

The only cost I have noted down at the moment (other than conveyancing of course) is the change of use from commercial to residential.  Are you saying there would also be a planning application I have to submit in this situation?  As I said, I wouldn't really be proposing to change much in terms of building work. 

Robin9

Beware of issues with Utilities 

SDLT_Geek

t1redmonkey said:

First off, forgive me if I'm very naive on this topic, but I've seen a property I really like which was up until recently, being used as offices.  It's basically an old Victorian house which someone could move into and live in, the only thing I'd really have to do with it is get a shower/bath put in, as there are only WC's at the moment, so no proper bathroom.

I'm a bit confused on how difficult/costly the process would be to buy this building, and turn it back into a residential property.  I'm not talking about any conversion/building work, just the actual legal costs. 

I contacted the council and was told change of use cost is £460 per residential unit proposed and they used the example of 10 flats = £4600, though I'm thinking because I only want to turn it back into a single house, I'd only have one lot of £460 to pay?

The building also has a NNDR of just over £10k.  Would I have to pay anything here, or if I got the change of use application submitted as soon as I purchased, could that avoid/reduce having to pay this?

Any advice is much appreciated, thanks.

The stamp duty land tax might be different from a straight residential purchase.  It seems likely, from what you say, that it will be charged at the non-residential rates rather than the residential rates.  Whether this works out as more or less will depend on the price.

Will you need a mortgage?

user1977

I think there are some minor exceptions depending on where you are, but generally if you want to change the use from commercial to residential then yes, you would need to get planning consent.

How are you proposing to fund the purchase? A standard residential mortgage is probably not going to work.

t1redmonkey

Would be buying it with cash only.  It's below the stamp duty threshold so no stamp duty to pay.  It's currently classed as freehold non-residential.

Would I have to pay the business rates I mentioned on it until the change of use gets approved?  I assume I cannot start that process until after I'd bought it, so there might be a risk of it not being approved as well?

DullGreyGuy

You would need planning permission for Change of Use, government website says its up to £578 per dwelling you'll create but thats just the councils fee for reviewing the proposal. Who's going to prepare the application for you? Are you going to go through the process of challenge if they say no? 

Will you have somewhere to live whilst this is happening? Are you reliant on a mortgage to buy the property? Utilities etc will be commercial too right now, have the funds to pay their higher rates whilst you wait for planning and everything else? 

It's all doable but can require deep pockets. An initial conversation with Planning is always a worth while investment on what their general aims are etc... could be they want to develop office rather than residential space there and so your odds suddenly drop

user1977

t1redmonkey said:

It's below the stamp duty threshold so no stamp duty to pay.

The non-residential threshold i.e. £150k?

Would I have to pay the business rates I mentioned on it until the change of use gets approved?

I expect so. There may be reliefs available if it's unoccupied.

I assume I cannot start that process until after I'd bought it, so there might be a risk of it not being approved as well?

Yes, it might not be approved, which is why you don't need to wait until you buy it before applying for planning - developers don't just buy land and cross their fingers that they'll get planning permission. Typically you'd first enter into a conditional contract with the seller, then make your planning application, and if you get an acceptable permission you then complete the purchase.

But the seller may be getting other bids from buyers who are prepared to take a view on whether they get planning (or don't need to), and (unless your price is suitably attractive) might not be prepared to hang around for your planning application and for the transaction to possibly fall through.

t1redmonkey

user1977 said:

t1redmonkey said:

It's below the stamp duty threshold so no stamp duty to pay.

The non-residential threshold i.e. £150k?

Would I have to pay the business rates I mentioned on it until the change of use gets approved?

I expect so. There may be reliefs available if it's unoccupied.

I assume I cannot start that process until after I'd bought it, so there might be a risk of it not being approved as well?

Yes, it might not be approved, which is why you don't need to wait until you buy it before applying for planning - developers don't just buy land and cross their fingers that they'll get planning permission. Typically you'd first enter into a conditional contract with the seller, then make your planning application, and if you get an acceptable permission you then complete the purchase.

But the seller may be getting other bids from buyers who are prepared to take a view on whether they get planning (or don't need to), and (unless your price is suitably attractive) might not be prepared to hang around for your planning application and for the transaction to possibly fall through.

Below £225k sorry, I'm in Wales, so technically it's LTT rather than Stamp Duty.

All useful information though, so thank you!

theoretica

If you are converting a building to residential, even though it is reconverting, you will want to investigate what building standards you need to meet - you may find you need firedoors everywhere, for instance, even though the identical property next door that was never an office doesn't.  Or meet certain energy efficiency standards.  Probably need architect fees somewhere along the line.