THE RISE OF CONVERSIONS - COMMERCIAL TO RESI BECOMING INCREASINGLY POPULAR
As people left cities in search of more space and during COVID, many buildings became unoccupied as their use as an office blocks become unnecessary. In order to encourage conversions, the government introduced new rules facilitating the conversion of commercial premises in England into homes. The changes meant that full planning applications were not required, and homes instead were delivered through a prior approval process.
From April 21, 2021, unused commercial buildings were granted permitted development to be converted into homes via a fast-track prior approval. In addition, a fast track for extending public buildings, such as schools, colleges, and hospitals was introduced.
As part of the new rules, councils were only able to turn down applications on limited grounds, including flooding risk, noise pollution, and inadequate natural light.
“We saw a lot of this type of activity in 2021; it was definitely a trend which formed during the second year of the pandemic,” Colin Sanders said.
Colin Sanders went on to say that clients were assessing the performance of their assets and they were looking to use Tuscan Capital’s change-of-use product to convert those that were vacant or not providing a decent yield.
“In the majority of cases they received a favourable opinion from their local planning authority and were able to make the transition,” he added.
Colin Sanders believes that the turnaround in fortunes for the investor could be quite substantial, as he said many commercial buildings have high residential potential.
“I know of a failing shop which had a deep footprint - the premises went quite far back which was not necessarily that beneficial, while it had four flats above it,” said Colin Sanders.
He explained that the commercial landlord was able to halve the shopping space and alter the residential configuration.
“They were left with a much greater residential area and a smaller but better presented shop, which provided a better return on half the retail space,” he added.
This type of activity has been seen across the country - for example, BLEND Network funded a town centre rehabilitation project, in order to turn a redundant office block in Great Yarmouth into 30 residential flats at the back end of last year. The conversion has helped retired people as well as those taking advantage of the government's Help to Buy scheme.
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