Flat conversions are a popular strategy amongst property investors. It is often be more cost-effective to convert an existing building into multiple units rather than build a completely new structure, plus the returns from renting or selling the units once completed can also be attractive.
If the plan is to keep the property as an investment, yields on multi-unit blocks are usually higher than a standard BTL property plus the chance of complete void periods are lower than a single BTL due to the multi-tenanted nature of the asset.
Flat conversions can be a great way to add value to an existing building which is either no longer fit for purpose or is not being used to its full potential. However, they can be challenging to get right and this blog aims to cover some common pitfalls and challenges associated with flat conversions.
KNOW YOUR MARKET
Flats cater to various housing needs and attract a broad range of tenants, however you need to make sure that there is sufficient tenant (or buyer) demand in the location you are considering, and that the units will appeal to your specific target market by ensuring you are tailoring the design of the property appropriately.
Overlooking important factors like parking and outdoor space could have a detrimental impact on demand for the properties and so these elements should be carefully considered when designing the scheme.
Your target market will also dictate the size & type of units that are included within the scheme, although this will also, to an extent be limited by both the current layout of the building and any consents required from the local authority.
GET THE SIZES & LAYOUT RIGHT
Following on from the above point, it is important to make sure that the flats are well-designed for your buyers or tenants. Accommodation needs to ‘flow’, rooms need to be appropriately sized for the intended users and there needs to be an appropriate level of natural light serving each flat.
In some areas (typically city centres) smaller studio units can be attractive whereas in other locations, larger units may be more appropriate. It is also important to bear in mind that any units below 30m2 may be difficult to secure finance on and so this is likely to restrict the market for those units or provide you with challenges when it comes to refinancing them.
It also can be difficult working within the limitations of an existing building, as it would not have been originally built with the intention of residential use, therefore it makes sense to engage an architect who is experienced with flat conversions to ensure the scheme is well designed and you get the most out of the building.
MAKE SURE THAT YOU ADHERE TO ALL BUILDING REGULATIONS
Flat conversions will need to comply with building regulations to ensure the safety and comfort of the properties. That sounds fairly obvious, but there are a number of factors which are often overlooked which can result in additional costs if not factored into your original design & build budget from the outset.
Whilst not an exhaustive list, here are some of the key areas that need to be considered:
Fire safety
The property must meet stringent fire safety standards which can include the need for escape routes, fire-resistant doors, smoke detectors/fire alarms, sprinkler/mist systems, dry or wet risers and common areas & staircases must be designed to provide safe escape routes in the event of a fire. The exact requirements will depend on the size & layout of the building. Fire safety is one element of a flat conversion that you definitely want to get right to ensure your property is safe and fit for purpose.
Sound Insulation
Building regulations require there to be an appropriate level of sound insulation between adjacent flats to minimize noise transfer and ensure privacy for occupants. Your design and costing should take this into account as it could have a big impact on the conversion costs.
Insulation
Building regulations differ in terms of what insulation is required for a residential property versus a commercial property, so understanding whats required from the outset is important.
Ventilation
Regulations require that flats are served by proper ventilation for the health & comfort of occupants. You will need to ensure that there is adequate natural & mechanical ventilation for each unit.
Structural stability
It goes without saying that the building will need to be structurally sound for the proposed use but it needs to be considered whether the structural components are able to cope with the additional loads and changes brought about by the conversion. A structural engineer will need to be engaged to review and give an opinion on this.
Energy & water efficiency
Any proposed new dwellings must meet requirements for the amount of water likely to be used and overall energy usage. This will factor into your design to ensure that appropriate insulation is used, heating systems are efficient and that fixtures & fittings are also as efficient as possible.
These are a few examples of factors that need consideration when planning a flat conversion. Navigating Building Regulations is a challenging aspect of any project and so you should always consult an experienced and reputable architect who is capable of designing your project to comply with all current building regulations as well as making sure to employ an experienced, professional contractor who is competent at completing such works.
We have been involved with the funding of a number of flat conversions and our refurbishment & development products are a great way to fund these.
Please speak with us if you have a conversion project that your considering so we can provide you with details of how our funding could support.
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