Converting a house into flats is an attractive investment for landlords as it can increase the rental returns on the property and the value of the house.
There are a number of things to look at when considering converting a house, though. There needs to be a high demand for flats in the area. Landlords need to know the type of tenants that are looking for flats to rent. Students and single professionals often seek flats, but families generally want small houses.
Planning permission will be required for flat conversions and any building work must conform to the building regulations.
The cost of conversion needs to be accurately assessed. According to the estate agents Portico, a basic conversion that includes erecting walls, installing a bathroom and heating will cost about £25,000. The utility companies will need to provide separate gas, electricity and water meters for each flat. Costs for installing new meters will vary, so landlords need to talk to the utility companies about separate meters.
A solicitor needs to be consulted to make sure there are no restrictive caveats in the deeds that prevent conversion.
Finance needs to be arranged too. A broker can organize a commercial mortgage for the project. For short-term finance, a bridging loan can be useful. It is also advisable to have unoccupied property insurance while the work is being carried out.
Though it is not a simple process, many landlords are finding that converting houses to flats can make for a profitable investment.