Tips/tips please - financing and doing conversion/renovation
Discussion
After days of trawling the internet, I would like to tap PH for their collective knowledge. I will (have to) get some professional advice, but at this stage would like to tap your experiences and kowledge for some pointers.
I have found a large, detached Victorian house, that is currently 4000 square feet. This includes ground floor, first floor and loft conversion.The house is too big for a family home. It is currently converted into two flats - ground floor and first floor/loft.
Subject to planning permission (initial guidance from the council planning dept is encouraging), I would like to develop it into two semi-detached homes, which would each be about 2500 square feet. This would involve a lot of work as it needs a full refurb anyway. Off the top of my head:
- division of the property
- 2 new staircases
- 2 new front entrances to replace the current single entrance
- 2 new rear garden entrances with bifold doors etc
- 2 separate multizone heating systems - boiler, pipework, rads & electronics (currently has two, but they are in the flats, and ancient)
- 2 separate rewires/consumer boards
- insulation/building regs stuff
- windows
- building of 2 extensions into the side returns to make 2 x decent sized kitchens
- converting current (full length & width) cellars into basements
- 2 x garden refurbs at back
- 2 x garden refurbs at front, to include driveways/parking
Advantages - no party wall issues. Disadvantages - it is a huge amount of work, and it is in London so will cost a fortune to buy and to do (but there should be upside)
Initial help from you lot:
- there is no point on making an offer unless I have planning permission. Yet this process is many thousands of pounds and months of work, as the pre-application process requires drawings etc and nearly £1000 in council fees, without the solicitors' fees necessary to get the plot diagrams etc. So what do people normally do in this situation.
- How to finance this? What recommended lenders? Commercial (if available) or homeowner loan? What do I look for?
- If I keep one to live in, and sell the other, I'll get smacked for CGT, correct? Can I offset build costs against the profit rise? Or do I swallow the huge loan repayments and rent it out fopr a few years to try and at least keep some interest and capital paid off while waiting for more capital appreciation (which of course also would be liable for CGT)
- ANy VAT advantages I can use on the refurb, or would it be a full 20% on everything?
Lastly, any experiences/tips on a project this large and daunting. In terms of price, they want north of 1 million for the building. I estimate that little list above to be another 750k to 1million worth of work: but that is a complete guess!
I have found a large, detached Victorian house, that is currently 4000 square feet. This includes ground floor, first floor and loft conversion.The house is too big for a family home. It is currently converted into two flats - ground floor and first floor/loft.
Subject to planning permission (initial guidance from the council planning dept is encouraging), I would like to develop it into two semi-detached homes, which would each be about 2500 square feet. This would involve a lot of work as it needs a full refurb anyway. Off the top of my head:
- division of the property
- 2 new staircases
- 2 new front entrances to replace the current single entrance
- 2 new rear garden entrances with bifold doors etc
- 2 separate multizone heating systems - boiler, pipework, rads & electronics (currently has two, but they are in the flats, and ancient)
- 2 separate rewires/consumer boards
- insulation/building regs stuff
- windows
- building of 2 extensions into the side returns to make 2 x decent sized kitchens
- converting current (full length & width) cellars into basements
- 2 x garden refurbs at back
- 2 x garden refurbs at front, to include driveways/parking
Advantages - no party wall issues. Disadvantages - it is a huge amount of work, and it is in London so will cost a fortune to buy and to do (but there should be upside)
Initial help from you lot:
- there is no point on making an offer unless I have planning permission. Yet this process is many thousands of pounds and months of work, as the pre-application process requires drawings etc and nearly £1000 in council fees, without the solicitors' fees necessary to get the plot diagrams etc. So what do people normally do in this situation.
- How to finance this? What recommended lenders? Commercial (if available) or homeowner loan? What do I look for?
- If I keep one to live in, and sell the other, I'll get smacked for CGT, correct? Can I offset build costs against the profit rise? Or do I swallow the huge loan repayments and rent it out fopr a few years to try and at least keep some interest and capital paid off while waiting for more capital appreciation (which of course also would be liable for CGT)
- ANy VAT advantages I can use on the refurb, or would it be a full 20% on everything?
Lastly, any experiences/tips on a project this large and daunting. In terms of price, they want north of 1 million for the building. I estimate that little list above to be another 750k to 1million worth of work: but that is a complete guess!
2000 square foot semis in average nick are going for 1/3-1.5m in this road at the moment, so should be worth it.
But mainly, I want to live in this road (it's beautiful, and very convenient for the office in the City), and I also want to build my ideal town house, which would be an updated period property. Hence considering this madness!
But mainly, I want to live in this road (it's beautiful, and very convenient for the office in the City), and I also want to build my ideal town house, which would be an updated period property. Hence considering this madness!
worsy said:
Not quite the same but a friend of mine is currently mid way through a project taking down all but the front facade oif his victorian terrace and rebuilding. This is central London. If of interest i can put you in touch.
Yes please - any advice/guidance from someone else doing it in London would be great.Firstly see if you can get the finance because it isn't easy these days - most will sell / re mortgage their existing home as commercial finance either isn't available or comes at a huge cost unless you have a track record in development.
I borrowed from friends until I could sell my house and am typing this from a caravan !
Regarding planning unless it's unsaleable as it stands or you are offering a substantial uplift on the grant of planning approval, then typically you have to buy it as it stands and take the risk, including the holding costs for 6+ months.
I borrowed from friends until I could sell my house and am typing this from a caravan !
Regarding planning unless it's unsaleable as it stands or you are offering a substantial uplift on the grant of planning approval, then typically you have to buy it as it stands and take the risk, including the holding costs for 6+ months.
Harry Flashman said:
worsy said:
Not quite the same but a friend of mine is currently mid way through a project taking down all but the front facade oif his victorian terrace and rebuilding. This is central London. If of interest i can put you in touch.
Yes please - any advice/guidance from someone else doing it in London would be great.If you keep one and sell the other (having not owned it as an investment property), is there nor the risk you will be hit with IT as opposed to CGT as you'll be taxed as a property developer rather than a property investor?
It may be worth taking the advice of a current practitioner on this matter as it's a *long* time (decade, plus) since I studied taxation.
It may be worth taking the advice of a current practitioner on this matter as it's a *long* time (decade, plus) since I studied taxation.
EJH said:
If you keep one and sell the other (having not owned it as an investment property), is there nor the risk you will be hit with IT as opposed to CGT as you'll be taxed as a property developer rather than a property investor?
It may be worth taking the advice of a current practitioner on this matter as it's a *long* time (decade, plus) since I studied taxation.
Absolutely - this is definitely an issue. It may be worth taking the advice of a current practitioner on this matter as it's a *long* time (decade, plus) since I studied taxation.
Might be worth advice on the matter as it may be possible to do capital works whilst both are still joined and thus counted as your PPR...and then split the properties with that to be sold at a re-based (higher) input price.
This may, of course, all change depending on who is forming a government in the morning...
This may, of course, all change depending on who is forming a government in the morning...
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