Converting house into 3 flats

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    Converting house into 3 flats

    Hello,

    My mother owns a 4 bedroom house in clapham, london. The house was worth 1.4 million when last valued in December last year.

    My mother has £70,000 left on mortgage but only an income of £8k p/a

    Her low income makes it very hard for her to get a mortgage

    I believe it is very important for my mother to keep hold of this property as there is planned regeneration work in an already affluent area so cannot see these house prices declining.

    As she would like me to get on the ladder we have looked at the possibility of converting the house into flats. It currently has enough square meterage required by the council and both adjacent properties have fully extended although there are few examples of conversions like this on the road.

    So the plan would be to convert the house into 3 self contained flats. 1 x 3 bedroom, 1 x 2 bedroom and 1 x 1 maybe 2 bedroom flat. One for my mother, me and one rented.

    This would provide funds from the rented flat to pay of remortgage and my rent to support my mother as a pension.

    I have estimated work to cost £220000. This would include loft extension, ground floor side extension and a second storey extension. The house will also require some underpinning but this is not a huge problem.

    We would need to remortgage to raise funds for the work roughly £150,000.

    My mum would have liked for us to buy a house together as she is getting older but have explained that I need my own space and see this as a great option to be close, keep the house as an investment and to stay in the area.

    It may also be detrimental to turn I to flats as I reality I am not sure wether this would add on that much value than if we renovated into a family home and sold but that would mean losing the house.

    I would love some advice on the following:

    Has anyone undertaken this kind of project and have any advice?

    Are there any legal/tax implications we should be aware of especially if selling after conversion?

    Does this sound like a good idea?

    Is my budget realistic?

    Where is the best place to get advice?

    #2
    What is the likelyhood of you getting planning permission to do this developement? Have other houses on your street been converted to flats recently? Have you checked your councils local plan for the area?

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      #3
      There are many flats on the road but not many 3 bedrooms. Wandsworth council have told me they would accept any applications as long as the current property conforms to their minimum square meter age. This coupled with the vast extension work either side of us and the architects response makes me quite confident.

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        #4
        I have done similar and believe your budget is achievable, depending on the quality of materials/work. Don't forget that splitting the water, electricity and gas is not a painless (or free!) experience. In fact, it can be a real hassle.

        Legals: Assuming you are right that Wandsworth give you Planning Permission (do not go ahead until you have it), you will need to register each flat at the Land Registry. If transferring ownership of the house or one or two flats, you may have to pay Stamp Duty. Do remember that you will also have to pay 3 lots of Council Tax as soon as the flats exist: empty or full.

        Tax: I suggest you pay for some advice. If you and your mother each live in one flat as your primary residence, they will be exempt from Capital Gains Tax, but the other flat will not. You should be able to put a proportion of the renovation cost against future capital gain (which is calculated and taxed differently depending on whether the owner is an individual or a company).

        I suggest, though, that you do think carefully about whether you really want to go ahead with the conversion in a relatively high-priced property because Planning rules do change. For example in many parts of Camden, you are now NOT allowed to re-convert flats back into a house. If that rule gets introduced in Wandsworth in the future, you might find you have reduced the value and cannot go back...

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          #5
          Originally posted by manthony1 View Post
          There are many flats on the road but not many 3 bedrooms. Wandsworth council have told me they would accept any applications as long as the current property conforms to their minimum square meter age. This coupled with the vast extension work either side of us and the architects response makes me quite confident.
          If there are already many flats on the road, be wary that the Council may want to keep it as a single family home.

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