In April 2021 a public consultation took place for draft legislation for a new...
Why are property entrepreneurs converting commercial buildings to homes?
Nobody could have foreseen how the last couple of years would have played out. Many sectors have seen change at an accelerated pace. For the property sector, the pandemic has triggered significant permitted development changes, allowing property developers to revitalise high streets, provide quality housing to address the housing crisis, boost the UK economy and make considerable profits. Our data engineers here at Nimbus Maps have found thousands of sites with a predicted return on costs in excess of 35% when converted from commercial to residential use! Read on to discover how you’ll find the best opportunities…
Use Class E
In September 2020, the planning classification became easier to grasp with the grouping together of many commercial properties. Use classes A1 (shops), A2 (financial and professional), A3 (restaurants and cafes) as well as parts of D1 (non-residential institutions) and D2 (assembly and leisure) were all usefully recategorised under a new use Class E.
Class E now includes retail premises, offices, cafes, restaurants, nurseries, gyms and light industrial. But if use class E is exclusively for commercial use, why is it relevant for anyone looking for new residential opportunities?
New Class MA
In March 2021 the government announced the introduction of Class MA permitted development rights. The ‘MA’ stands for Mercantile to Abode – a fancy way of labelling commercial to residential. The aim of this new permitted development is to simplify the conversion of vacant properties under use Class E to residential Class C3 (dwelling houses). Class MA bypasses the extended process of seeking change-of-use planning permission and gives clear guidelines.
Property developers and investors are an instrumental part of our economic recovery, revitalising town centres with profitable homes, it’s no surprise that this new Class MA opportunity is the topic of discussion in most property networking circles.
Top tips for commercial to residential developments
It’s an exciting new opportunity, and we’ve highlighted some top tips to consider when finding commercial properties suitable for conversion to residential use:
1. Understand the restrictions
As simple as Class MA sounds there are some restrictions in place.
- Every site will need to be vacant for a minimum of 3 months before applying for prior approval. Nimbus Maps Elite has a vacant buildings overlay highlighting commercial units across England that are no longer occupied and splits them into colour-coded categories of empty for 6 months or over.
- The footprint of the property you are seeking to redevelop for residential usage must not exceed 1,500 sqm. Nimbus Maps Elite has a filter allowing you to focus on sites that meet this requirement.
- The area in which the property is situated may prevent you from using Class MA. For example, properties in the following areas – areas of outstanding natural beauty (AONB), sites of scientific interest (SSSI), listed buildings and goes without saying military explosive areas. Nimbus Maps has several technical overlays to show clearly where these areas are pinpointed on the map. This will quickly give you a view of where Class MA will apply and prevent any wasted time. Learn more here.
2. Connect with off-market owners
Once you have identified the properties you wish to convert, it is important to know how to find the owners and how to pique their interest. The market is already seeing signs that commercial agents have started increasing the value of premises to reflect the expected gold rush, making it even more essential that you have the tools to find off-market deals. Nimbus Maps has compiled thousands of data sets from sources, including the land registry, meaning you can instantly obtain ownership details and connect with them. Each owner may have multiple sites they want to sell or redirect you to owners who have properties that are available for off-market deals.
To enjoy the benefits of first-mover advantage you’ll need to start finding sites now.
3. Use technology
Our Nimbus Maps® data scientists have created a powerful new tool to save you time and money finding class MA opportunities.
The new Class MA Elite+ Strategy highlights Class E commercial properties with a floor space of less than 1,500 sqm, that also has a residential feel to them and would therefore be suitable for conversion to residential under new class MA PD Rights.
What does the Class MA Elite+ strategy show?
- Uncovers class MA opportunities with the criteria and exclusions built-in.
- Each site is rated by its predicted profitability E.g. Red = 15-25% return on cost, Amber = 25-35% return on cost & Green = 35%return on cost.
- Calculations consider regional variation in yields, rents & build costs.
For each highlighted opportunity, simply click to reveal the following information:
- Title number
- Site size
- Rates assessment per sq.ft
- Local residential value
- Table that explains calculation for the predicted return on cost.
Finding sites with Nimbus Maps will give you the competitive advantage. You’ll be accelerating the process. The platform will help you find the right sites, establish a shortlist, manage the progress and collaborate with other people in your team on each project. To discover how you can take advantage of Class MA with Nimbus Maps, book a personalised demo today!