Planning, change of use, mortgage, funding, etc
Discussion
Bit of an all-encompassing title, I'll admit, but I was hoping to gain a bit of knowledge on all or some of the above...
My partner and I are looking to move shortly, our current property is on the market and we are looking at places to move to.
We have found an old church (I say old, in terms of it has not been used recently, the actual construction itself is a horrible 70's era building). This is up for sale locally to us, and has been for some time. We like the idea of acquiring it and eventually living in it.
My question(s) are, the church and associated land do not currently have any sort of planning permission to be used as a residential dwelling. Having not done anything along these lines before, I assume the process would be something like this:-
1) Obtain a mortgage on the church and land (being a "commercial" property, I assume, this cannot be done under a standard mortgage - how do we go about this, and who from)?
2) Come up with a proposed design and apply for planning permission to change the use and also implement our ideas to convert this into our new house. This is the bit that worries me slightly, I assume we have to buy the church "blind", not knowing if the planning will be approved or not, so in essence, this is somewhat of a gamble? I was perhaps hoping that we could apply to the council with our plans before purchasing, to see if it may be a possibility or not, before committing to step 1?
3) Providing planning is passed, we would then need to raise funds to renovate the property. Again, how can this be achieved, can this be obtained through our original lender, on an up-front basis, based on our proposed plans, or are we normally expected to float the improvement costs and re-mortgage at various stages of improvement to re-coup money?
Are there any other glaring points I have missed and should be considering?
Money wise, we have enough for a 10% deposit on the church itself and enough to cover all other associated costs to do with moving house.
Any advice greatly welcomed.
Joe.
My partner and I are looking to move shortly, our current property is on the market and we are looking at places to move to.
We have found an old church (I say old, in terms of it has not been used recently, the actual construction itself is a horrible 70's era building). This is up for sale locally to us, and has been for some time. We like the idea of acquiring it and eventually living in it.
My question(s) are, the church and associated land do not currently have any sort of planning permission to be used as a residential dwelling. Having not done anything along these lines before, I assume the process would be something like this:-
1) Obtain a mortgage on the church and land (being a "commercial" property, I assume, this cannot be done under a standard mortgage - how do we go about this, and who from)?
2) Come up with a proposed design and apply for planning permission to change the use and also implement our ideas to convert this into our new house. This is the bit that worries me slightly, I assume we have to buy the church "blind", not knowing if the planning will be approved or not, so in essence, this is somewhat of a gamble? I was perhaps hoping that we could apply to the council with our plans before purchasing, to see if it may be a possibility or not, before committing to step 1?
3) Providing planning is passed, we would then need to raise funds to renovate the property. Again, how can this be achieved, can this be obtained through our original lender, on an up-front basis, based on our proposed plans, or are we normally expected to float the improvement costs and re-mortgage at various stages of improvement to re-coup money?
Are there any other glaring points I have missed and should be considering?
Money wise, we have enough for a 10% deposit on the church itself and enough to cover all other associated costs to do with moving house.
Any advice greatly welcomed.
Joe.
Edited by joe oliver on Tuesday 22 July 20:12
Hi mate,
I've just been going through a similar process, and it has a few pitfalls but potentially great rewards!
Firstly, forget getting a mortgage, especially a 90% LTV on a commercial property, no chance
Secondly, you can apply for a change of use even if you don't own it. All planning applications can be done in advance, but some sellers won't wait for it.
I'll put some more info together later as I'm out just now.
I've just been going through a similar process, and it has a few pitfalls but potentially great rewards!
Firstly, forget getting a mortgage, especially a 90% LTV on a commercial property, no chance
Secondly, you can apply for a change of use even if you don't own it. All planning applications can be done in advance, but some sellers won't wait for it.
I'll put some more info together later as I'm out just now.
Thanks for the reply.
So I assume as we can't realistically stretch beyond 90%LTV, that it's a non starter?
How about if planning for change of use is obtained and approved in advance, would a lender be more likely to loan at that level?
If not, any idea what percentage deposit we'd be looking at to make it work?
Joe.
So I assume as we can't realistically stretch beyond 90%LTV, that it's a non starter?
How about if planning for change of use is obtained and approved in advance, would a lender be more likely to loan at that level?
If not, any idea what percentage deposit we'd be looking at to make it work?
Joe.
Edited by joe oliver on Tuesday 22 July 20:50
joe oliver said:
Thanks for the reply.
So I assume as we can't realistically stretch beyond 90%LTV, that it's a non starter?
How about if planning for change of use is obtained and approved in advance, would a lender be more likely to loan at that level?
If not, any idea what percentage deposit we'd be looking at to make it work?
Joe.
Hi joe, So I assume as we can't realistically stretch beyond 90%LTV, that it's a non starter?
How about if planning for change of use is obtained and approved in advance, would a lender be more likely to loan at that level?
If not, any idea what percentage deposit we'd be looking at to make it work?
Joe.
Edited by joe oliver on Tuesday 22 July 20:50
Sorry to be the bearer of bad news, but it's extremely unlikely that you could get a 90% LTV mortgage on a non domestic property, to be honest Renovation is right, more like 50% is the maximum! and that would generally be either a bridging loan or a development mortgage. Both would probably insist on having the change of use in place and agreed before lending as well. It's very difficult to fund these type of developments without the cash in hand, or the precise experience of doing the conversion. You would need detailed plans, coatings, quotations and designs in place to even stand a chance of lending on it. Maybe concentrate on buying it in cash, ie savings and equity release from your existing property, and then loom to secure a loan on it to develop it. High risk. But probably the only way to do it. I would say it's the biggest reason old buildings like these are vacant a lot of the time, because no one can get security on them.
Always worth speaking to a good mortgage adviser though, such as Sarnie on PH.
Hi Joe
As per Griff's comments, you aren't going to find anyone lending development finance for speculative deals such as this for any LTV north of 50%, especially to someone without experience on a project without PP in place.
As much as the residential funding is quite difficult ATM, it's a walk in the park compared to commercial.
As per Griff's comments, you aren't going to find anyone lending development finance for speculative deals such as this for any LTV north of 50%, especially to someone without experience on a project without PP in place.
As much as the residential funding is quite difficult ATM, it's a walk in the park compared to commercial.
If you're prepared to throw a couple of quid at the project, you could always make your offer 'subject to planning permission being granted'. If it's been on the market for quite a long time then the seller may be interested.
Again, potentially another route to go down is to see exactly what needs to be done to allow for a residential mortgage and make this happen before you purchase. I.E. If it has to have a kitchen, put a cheap s
tty kitchen in there before the sale.
When there's a will there's a way - it just won't be easy and may take time.
Again, would some sort of bridging finance help you out?
The conversion of a building such as that isn't going to be cheap if imagine - if you've only got 10% deposit, do you have the funds to renovate? Or is that why you've only got 10%?
Remember that as with all this stuff everything is negotiable...you may just have to get creative!
Again, potentially another route to go down is to see exactly what needs to be done to allow for a residential mortgage and make this happen before you purchase. I.E. If it has to have a kitchen, put a cheap s
tty kitchen in there before the sale.When there's a will there's a way - it just won't be easy and may take time.
Again, would some sort of bridging finance help you out?
The conversion of a building such as that isn't going to be cheap if imagine - if you've only got 10% deposit, do you have the funds to renovate? Or is that why you've only got 10%?
Remember that as with all this stuff everything is negotiable...you may just have to get creative!
joe oliver said:
Thanks everyone, gives me a bit more food for thought.
I think one of my other answers has been answered above then, in that would a lender lend as domestic, if planning has been granted as such prior to the purchase? It has a kitchen, toilets, just no bedrooms or lounge etc!
Get creative!! There's one big diner/lounge/bedroom area I think one of my other answers has been answered above then, in that would a lender lend as domestic, if planning has been granted as such prior to the purchase? It has a kitchen, toilets, just no bedrooms or lounge etc!
Most planning authorities have a pre-planning advice process, where you can discuss your proposal with a planning officer before making a full application. This is rarely free and is usually offered as non-binding, but you'd get an idea of the viability.
Notes of caution if there is no/little outside space you may have problems with some planners. Also it is not unknown for the unscrupulous to keep an eye on planning applications/consents and if it goes through to gazump the "subject to planning" buyer. Also if it is still owned by a church be prepared for all sorts of hassle, unrealistic restrictive covenants and delay if you ever try to get to exchange of contracts stage.
Notes of caution if there is no/little outside space you may have problems with some planners. Also it is not unknown for the unscrupulous to keep an eye on planning applications/consents and if it goes through to gazump the "subject to planning" buyer. Also if it is still owned by a church be prepared for all sorts of hassle, unrealistic restrictive covenants and delay if you ever try to get to exchange of contracts stage.
The Moose said:
joe oliver said:
Thanks everyone, gives me a bit more food for thought.
I think one of my other answers has been answered above then, in that would a lender lend as domestic, if planning has been granted as such prior to the purchase? It has a kitchen, toilets, just no bedrooms or lounge etc!
Get creative!! There's one big diner/lounge/bedroom area I think one of my other answers has been answered above then, in that would a lender lend as domestic, if planning has been granted as such prior to the purchase? It has a kitchen, toilets, just no bedrooms or lounge etc!
For info My house is still not technically classed as habitable yet, despite a 7 month complete transformation, refurb in progress and rebuilding, it technically doesn't yet have a full working bathroom nor is the heating system running fully yet, so I'd struggle to get a residential mortgage on it just now!
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