Change of Use as an Investment Opportunityfjpinvestment
Property is still one of the best investments you can make. Although we have seen some uncertainty in the market as a result of Brexit, the market remains favourable, particularly against other, traditional investments. How can investors take advantage of this fully? The answer is a change of use.
With a shortening supply of housing in the market due to increasing difficulties in obtaining finance, we are seeing prices driven upwards. For investors then, it can be difficult to find a property ‘bargain’ in the market.
However, there is an alternative approach that many have not considered. We are seeing a decline in demand for office property, but a rise in residential property. With the demand low for commercial property, an increasing number of offices are being left empty, resulting in a real opportunity to change the use of office property at a discounted rate for residential use.
Investors making the move to change of use
More and more investors are seeing this as an opportunity. As the property is purchased at a discounted rate through lack of demand, the premises are converted and ‘flipped’ for a much higher rate. This in turns help support the economy and the Government’s efforts to lessen the damaging effects of a housing crisis.
Most shy away through fears of the planning permission not going through. However, planning permission, under the Governments new scheme, may not be required.
The Government has introduced a scheme known as Permitted Development Right, enabling changes to take place and a change of use without the need to even apply for planning permission.
This makes the entire process far less stressful and time consuming. This, however, does not apply to every office space. This will have to be researched before undertaking the purchase.
How does the process of change of use work?
To make the change, you will need to submit a Prior Approval Application. This application will be made up of drawings and a number of supporting documents, including impact on transport, risk of contamination, flood risk and noise impact of the construction.
If this is approved, you can move the development forward without the need for planning permission. The next bit is a little more obvious, you would use an architect and planning consultants to make the best use of the space.
This is also tied in nicely with the Governments initiative to move properties “up, not out”. The building, once converted for residential use, with have massive potential for income. With the plans in place, the documents will be submitted to the council, who have 56 days to make a decision. If approval is given, the investment can begin construction.
Note, using a good quality architect and planning consultant will maximise your chances of approval.
With the demise of the high street and an ever-increasing remote workforce, it is hardly surprising we are seeing the decline in commercial buildings. Looking at your own development property, you do have to consider the quality of the build.
Here at FJP Investment, we recently commissioned a survey asking over 1,000 prospective homebuyers their views on new-build residential property, and the perceptions were generally negative.
Not only do you need to ‘buck the trend’ and create stylised, conveniently located and eco-friendly property to maximise demand in your residential property, the property must also satisfy the existing Permitted Development guidelines. Space requirements and a seamless integration are essential here.
The potential is clear
With the high street business seeing less benefit to owning physical premises, the location is ripe for residential use. Offices often lay derelict for years, with Landlords eager to sell to the right buyer. Despite the respite over the economy, the need for housing remains high. Investors can begin to match that demand with much needed supply.
It is cost effective to convert existing buildings into new residential property over constructing from the ground up. The shell of the property is there, the necessary changes to satisfy residential requirements and maximise returns from the space are the only major elements that come into it.
Of course, we would never recommend a buyer considering this investment to go in without using a professional. By obtaining detailed, concise advice, the investment and subsequent return will be far more seamless.
If you are on the lookout for alternative investment opportunities, we would be happy to help you find your ideal investment. We have operated successfully for over six years with hundreds of happy clients, don’t hesitate to get in touch and we would be happy to guide you through the often puzzling world of property investments.