Posts with tag: flats

A Landlord’s Guide to Turning a House into Flats

Published On: June 26, 2016 at 8:35 am

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Categories: Landlord News

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Converting a house into flats is becoming increasingly popular with landlords, who can maximise their rental returns and capital growth through dividing larger properties into smaller units.

If you decide to rent out smaller flats rather than one large home, you will maximise your rental income in the short-term and increase your profit on sale in the long-term.

So where do you start?

London estate agent Portico has put together a guide on everything that landlords need to know when converting a house into flats:

Research the market  

Before you even plan a conversion project, you must make sure that there is high demand for flats in the area that you’re considering.

A Landlord's Guide to Turning a House into Flats

A Landlord’s Guide to Turning a House into Flats

Researching the current market is the best way to determine whether there is strong tenant demand for the type of property that you will create. Look at supply levels in your target market and identify the type of tenant that will be looking for your property type.

If the area is popular with young professionals or couples, then you know that they will generally be looking for smaller homes. If you find that families are seeking rental properties in the location you choose, conversion does not seem like a sensible option.

Planning implications 

Once you have found the right market for you and have looked into purchasing a buy-to-let property, the next thing to do is contact the planning department of your local council, as you are likely to need planning permission.

If you are given the go ahead by the council, you will then need to apply for building regulations before you start the conversion project.

Cost

The cost of converting will vary hugely from property to property, depending on the size, condition and the number of flats you’re creating. Portico expects a basic conversation, including putting up walls, installing bathrooms and central heating units, to cost around £25,000. You will then need to talk to utility providers so that each address has its own gas, electricity and water meters.

You must consider the following when budgeting for the project:

  • Planning approval from the local planning department.
  • Building regulation approval.
  • Installing new utility meters.
  • Fitting a new kitchen and bathroom.
  • Finance for development.
  • Sound deadening and tests.
  • Separate boilers.
  • Separate heating systems.
  • Creating a second entrance.
  • Decorating costs.

Finance

Portico advises investors to shop around for the best mortgage rates and loans before undertaking a conversion project, as this will be where your profit margin is made.

To ensure that your buy-to-let investment is protected during refurbishment work, put a comprehensive Unoccupied Property Insurance policy in place before you have tenants in place.

Law

Make sure that you inform the solicitor dealing with the legal transaction of your plans to convert, and ask them to identify any legal barriers to you doing so once the sale is complete, for example, caveats in the deeds.

Your solicitor will also be able to draw up leases for separate dwellings, which you will need if you plan on selling the properties.

Good luck with your conversion project!

Flats soar in value over the decade

Published On: September 23, 2015 at 3:56 pm

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Categories: Finance News

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A new investigation has indicated that one particular property type has experienced a surge in demand during the last decade.

The study conducted by the Halifax showed that flats have risen in price more than any other property during the last ten years.

Not a flat rate

Since 2005, the average price of a flat has risen by 60%, or £730 per month, from £87,550 to £233,424. Over the same period, a terraced house rose in value by 41%, a semi-detached home by 32%, a bungalow by 28% and a detached property by 21%.[1]

The Halifax believes that the large rise in sales of flats is due to the market in London, where over half of all sales are for this particular property type. However, the spiralling cost of a flat is apparently making some first-time buyers turn their attention to other property types, which could suit them better in the long term, should they wish to start a family.

First-time options

Data from the report shows that semi-detached homes have increased in popularity amongst first-time buyers. This property type accounts for 28% of purchases in the first half of 2015, in comparison to 21% ten-years previously.[1]

On average, the average price of a semi-detached home is £370,000 but in the North and the Midlands, this price is under £120,000. ‘First-time buyers have switched to some extent away from flats-reflecting their large price increases-towards semi-detached homes over the last decade,’ noted Martin Ellis, housing economist at the Halifax.[1]

In London, the average price of a flat was found to be £370,281.[1]

Abstract home and key (done in 3d)

Abstract home and key (done in 3d)

Regional differences

Flats were the best-performing property type over the last decade across the UK, but in London, Scotland and the South West of England, other property types came out on top.

Semi-detached were the most popular property types in the South East, East Anglia and the East Midlands. In Wales, terraced homes were the greatest performers, as well as in the North of England, the North West, Yorkshire and the Humber and the West Midlands.

All figures were taken from Halifax’s house price database.

[1] http://www.propertyflock.co.uk/f/EEB96B53D