There is a shortage of housing in Britain. An increasing number of investors are converting office space to residential use to provide more homes.
In 2013 the government introduced the permitted development (PD) initiative which allowed developers to convert office space to residential flat without the need for long drawn out planning permission.
In some areas, there is a surplus of empty office space, and these have provided opportunities for developers to create more housing. Changing work practices mean that more workers are working from home or using shared office space, which they rent for short periods. If this trend continues, the demand for office space will reduce, with more redundant offices available for conversion by developers.
In London, nearly a fifth of new housing has been from commercial property converted to housing, with an average of 16% in the rest of the country.
Local councils have supported conversions. Change of use permissions increased by 48% in 2015 and 2016. Planning applications for conversions are fast-tracked compared to the traditional planning permission process. Because of the government’s support of PD, local authorities normally look favourably on conversion planning applications.
Not all lenders will provide commercial mortgages and development finance to buy office space that developers want to convert. Some lenders are cautious because they are not sure about the long-term demand for apartments in converted office buildings.
A commercial mortgage broker is the best place to go to find the best lender for conversion projects.