Property Question
Discussion
I own a 3 bed Masionette above an Indian take away that is presently rented out. The take away takes up 90% of the ground floor with the other 10% belonging to my flat (entrance, a couple of small store rooms, hall and stairs leading to first and second floor). I've just found out the Indians below is now for sale at a cost of 15k, with a commercial annual lease of £9,600. It's now got me thinking, would it be possible to buy it at the above price then spend probably the same again converting it and changing the Maisonette into a 3 storey town house. This would certainly increase my flats value by more than the 30k purchase and conversion costs, but have no idea if it's even possible. Obviously it's not going to be that simple with the freeholder (same person I have my 179 year lease and peppercorn rent) as he will lose the 9k annual rent. Any help from those in the know or have had personal experience would be very greatly recieved.
tony wright said:
I own a 3 bed Masionette above an Indian take away that is presently rented out. The take away takes up 90% of the ground floor with the other 10% belonging to my flat (entrance, a couple of small store rooms, hall and stairs leading to first and second floor). I've just found out the Indians below is now for sale at a cost of 15k, with a commercial annual lease of £9,600. It's now got me thinking, would it be possible to buy it at the above price then spend probably the same again converting it and changing the Maisonette into a 3 storey town house. This would certainly increase my flats value by more than the 30k purchase and conversion costs, but have no idea if it's even possible. Obviously it's not going to be that simple with the freeholder (same person I have my 179 year lease and peppercorn rent) as he will lose the 9k annual rent. Any help from those in the know or have had personal experience would be very greatly recieved.
Or your own private indian restaurant... 
It depends on the location as to whether this would be well received by Planning or not.
If it's in a row of shops, in an area zoned for retail use, they might not welcome it.
But at that price, I'd be inclined to buy it on the offchance - the worst that would happen is that you can't achieve the permission you'd like, and you cna sell it on as a shop again?
If it's in a row of shops, in an area zoned for retail use, they might not welcome it.
But at that price, I'd be inclined to buy it on the offchance - the worst that would happen is that you can't achieve the permission you'd like, and you cna sell it on as a shop again?
Check the actual sale conditions e.g. Lease length
It may just be a 3-10 year lease and the vendor is wanting a lease premium or £15k for the value of the business reputation, contents or trade.
Often small businesses like this are sold in this way, you'll then still have to pay rent for the duration of the (short) lease.
May not be the case but £15k for a £9.6k rent works to 64% rental yield - never going to happen unfortunately.
It may just be a 3-10 year lease and the vendor is wanting a lease premium or £15k for the value of the business reputation, contents or trade.
Often small businesses like this are sold in this way, you'll then still have to pay rent for the duration of the (short) lease.
May not be the case but £15k for a £9.6k rent works to 64% rental yield - never going to happen unfortunately.
tony wright said:
Would it be the council I need to contact for change from commercial to residential use?
Yes, their Planning Department.But depending on how helpful and flexible they are, they may well tell you to submit a 'pre application advice' request, for which most Authorities charge these days... and take several weeks to respond to.
They're not selling the property. The tenants below are selling their business for £15,000 which then includes the liability of a commercial lease which you'll take assignment of and have to pay £9,600 per annum as well as Business Rates of circa £4,000 per annum.
There's no bargain to be had here.
The only way to do what you propose would be to buy the ground floor off your landlord subject to the current tenant simultaneously surrendering their lease. Based on a rent of £9,600 per annum the cost of purchasing that freehold could be north of £100,000, then add on planning costs for change of use, plus the costs of conversion and you ain't making any money.
There's no bargain to be had here.
The only way to do what you propose would be to buy the ground floor off your landlord subject to the current tenant simultaneously surrendering their lease. Based on a rent of £9,600 per annum the cost of purchasing that freehold could be north of £100,000, then add on planning costs for change of use, plus the costs of conversion and you ain't making any money.
Okay, forget my idea, obviously not going to happen
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