The Challenges And Opportunities of Commercial-To-Residential Conversions

In the UK, we have two chronic imbalances in our property sector…

There is a desperate shortage of residential housing in most towns and cities, but there’s also a surplus of commercial and retail space. The former is due to insufficient housebuilding and high levels of migration, while the latter is mainly due to the growth in remote working and e-commerce.

Given these imbalances, commercial-to-residential conversions may seem like a panacea. Yet choosing the right commercial or retail premises is crucial, as is devising a conversion plan that’ll receive the local council’s seal of approval. You’ll need their agreement before the process of turning excess commercial space into much-needed residential homes can be completed.

Here’s what you need to know about commercial-to-residential conversions…

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Check Whether Older Buildings Were Residential To Start With

Across the country, offices and commercial units often occupy former residential properties. Many of us have worked in Georgian or Victorian dwellings adapted into workspaces, with varying degrees of success. False ceilings and fire doors change building layouts, but restoring former homes is cheaper and easier than adapting a purpose-built office.

Google can reveal archive data about a building’s past life, as do local council websites. Other helpful data sources include the Land Registry website and Registers of Scotland’s sasines register, or Historic England’s listed building database. You can often tell simply by studying a building’s appearance (comparing it to its immediate neighbours, for instance) whether it was residential at one time.

Offices Are Easier Than Shops For Commercial-to-Residential Conversions

Some older residential dwellings have also been turned into shops, but most retail premises were purposely designed. It’s hard to create a home out of a building with on-street frontage, large expanses of glass and limited (if any) rear outside space. If you want to convert a shop into a dwelling, you’ll need to choose your plot carefully.

Look for shops at the end of a parade, or standalone units on residential streets. You’re unlikely to get planning approval to convert the middle unit in a row of shops, due to noise and privacy issues. Retail units with office/storage space above or below can easily be fashioned into houses, or (with a wide enough hallway and staircase) cost-effectively converted into separate flats.

Investigate Other Local Conversions

Browsing local council planning application portals can reveal whether property conversions tend to be approved. Planning backlogs and staff shortages mean new applications may take a while, but knowing approval is likely will give you confidence to source a plot and organise finance. Speaking of which, you may need a specialist lender for commercial-to-residential conversions.

If you’re not buying a property remotely, walk around neighbouring streets. Have any other properties obviously been converted, and can you identify successful design elements into your own plans? Councils may be swayed by the incorporation of sympathetic local building materials, parking or bin storage provision, window size reduction or recessed front doors.

Next Steps

Commercial-to-residential conversions are a cost-effective way of creating additional homes in an area oversubscribed with retail units or office space. Their square footage will be sufficient to host anything from a small flat to multiple dwellings. Services and utilities will already be piped into the building, and it’s easy to put up (or knock down) stud partition walls and false ceilings.

If this article has inspired you, take a look at our upcoming property auctions to see if any of today’s commercial plots have potential to become tomorrow’s homes…