Converting a House to Flats - 7 Points to Consider
We spoke to Duncan Taylor, partner at the leading UK law firm, Penningtons Manches, to get the lowdown on the rules and regualtions surrounding converting a house into multiple flats ready for the lettings market. He advises there are seven key points to consider when thinking about a conversion project.
Some houses contain restrictive covenants on the title to prevent the sub-division of a house into flats, either absolutely or otherwise only with the consent of a person or company. It is often the case the company has ceased many years ago or an individual has died, so there can be problems in tracing a party with the benefit of a covenant. More often than not though a solution can be found. It is possible to apply to the Upper Tribunal of the Lands Chamber to request a release of the covenant and with older covenants indemnity insurance can often be arranged. Never take short cuts when it comes to compliance as it will cost so much more to put things right afterwards.
Long Lease or Let?
Are you going to grant long leases at a premium or let the property out on a short-term let? Your funder may have something to say about this but if there is no mortgage finance on the property then the choice is yours. Owners can either take the value out now but retain the freehold interest for the nominal income via the ground rent or let on a short-term basis and receive rental income while retaining the freehold value. It’s worth speaking to your accountant about this before deciding what to do.
Building regulations and planning permission
Do not take any risks or shortcuts over building regulations and planning permissions. Employ a qualified architect who can take you through the process and advise you whether or not planning permission is required. Advice should also be sought on building control matters, such as in respect of fire regulations and noise insulation. It is always best to get required works such as this incorporated in your conversion specification rather than have to delay a sale, for example, and have works carried out after the conversion has taken place.
Planning time frames
Your architect will hopefully be familiar with the officers in the planning department at your local authority and will be able to advise on time frames. Planners have six weeks in which to make a decision once an application has been accepted. In addition, you cannot start works until you have building regulation consent as well.
Fire and Asbestos
It is often overlooked by landlords and sometimes even by managing agents, that where there are common parts in the building – such as a shared lobby or staircase – that risk assessments are required in respect of fire and asbestos. Advice is that on completion of the conversion works and once the building has been signed off by building control, that risk assessments are commissioned so that they are available for inspection at the time of sale. As a rule of thumb, any building erected after 1999 will not contain asbestos but the requirement for a fire risk assessment still remains for all properties with common parts. A mortgage lender is entitled to withdraw its mortgage offer if it is advised in the purchase of a flat with shared common parts that no such risk assessment exists.
The local planning authority is entitled to commence Enforcement Action against the developer, which includes as the ultimate sanction, the reinstatement of the building back to a single unit. That is, if the planning authority finds out. If not and the conversion has been in existence for 10 years without any complaint or objection then the owner may well be able to obtain a Certificate of Lawful Existing Use or Development. This does not mean that planning permission is granted retrospectively but means the building is immune from Enforcement Action. The problem is that in these 10 years the flats are practically un-mortgageable.
A Final Certificate, issued by building control, is evidence that all planning conditions in the planning consent have been complied, including risk assessments where there are common parts and electric and gas safety certificate. In older buildings, timber and damp guarantees are also welcome. The buyer of a long lease should also request a survey to confirm that the conversion is as good as it appears. Tenants should avoid anywhere where they are told that none of the above is available.
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