CFI: Bridging


Commercial conversions could drive development “Many


by


Martin Kearns, head of strategic policy, Tiuta


as the government attempts to find various ways to fill the housing gap there have been numerous proposals put forward in terms of loosening planning restrictions and, essentially, offering up a greater role for the private rental sector given the lack of available mortgage finance to those who would ideally buy themselves.


Commercial conversion one would think that the commercial property sector has very little to do with helping deliver a coherent housing strategy and you’d probably be right. However, as always there are exceptions to the rule: recently a well- established


national


newspaper suggested there was something missing from the government’s national Planning Policy Framework. How should developers be encouraged more to change the use of commercial property to residential purposes? the suggestion is that


converting offices – of which there are many standing empty around the country – into flats and apartments is far more cost-effective than building new apartment blocks. one would have to agree however to do so developers are going to have to get past the planning departments of local councils


– something far easier to say than do.


Demand dilemma if there is a loosening of planning law in this regard, then there could well be an opportunity to move some of those commercial properties to a residential purpose. However, the key point for developers if they can get over the planning hurdle is whether there is actually a strong enough demand for, what will essentially be city centre flats and apartments. recent history is already


littered with the fall-out from an over-abundance in the building of such properties. many developers rushed to build in the early noughties and these tended to be snapped up by buy-to-let investors. When the credit crunch hit, many of these apartments and flats were left empty as demand for such living fell. this is a key dilemma when considering the building of more flats and apartments – regardless of whether the building used to be an office block or not.


Finance factor clearly, there are a growing number of people who need to rent however the developer has to find landlords to buy the properties before they can be offered on the rental market. Landlords however are much more inclined to stay away from flats and apartments, and have a preference for houses given that they hold their value for longer and they are often easier to rent out.


52 mortgage introducer OCTOBER 2011


developers rushed to build in the early noughties and these tended to be snapped up by buy-to- let investors. When the credit crunch hit, many of these apartments and flats were left empty as demand for such living fell. This is a key dilemma when considering the building of more flats and apartments – regardless of whether the building used to be an office block or not.”


However, as that housing


gap grows wider and more people and families have to look at the rental option, then we might expect to see not just those existing apartment blocks filling up with tenants but also new developments coming to fruition.


Flexible funding in terms of our funding lines, we believe that a good development is a good development regardless of whether it has been a converted office block or not. certainly the entrepreneurs and developers we deal with are looking for opportunities like this, particularly if the refurbishment


and


development can be done quickly and efficiently. indeed, if they are opting for short-term finance from a lender like ourselves then this will be an absolute necessity. if the planning problems


can be overcome we may well be taking a new look at our city centres – they may not be the bastions of commerce that they have traditionally been, with office blocks to the fore. instead, we could see city centre living space increase dramatically.


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