Common conversion routes, in both directions
The most common residential-to-commercial conversions include turning a house into offices or a clinic, converting ground-floor residential space into retail, or changing a property into a mixed-use building. Commercial-to-residential conversions also happen, often converting former offices or retail into flats, but follow their own specific planning rules and are only briefly noted here.
Planning and permitted development
A change of use generally requires planning permission, though some changes may fall within permitted development rights, which allow certain changes without a full planning application. Permitted development rules are specific and can be withdrawn locally by an Article 4 direction, so it's essential to check the current position with the relevant local planning authority or the Planning Portal before committing to a purchase.
Funding the purchase and works (bridging or development finance)
Because the property typically can't be mortgaged conventionally in its intermediate state, the purchase and works are usually funded through bridging finance for lighter conversions, or a development finance facility for more substantial works. Development finance is a separate facility, sized to the scale of the project — see our bridging finance hub for more on short-term options.
Valuation before and after
A valuer will typically assess the property's current value and its anticipated value once converted and in its new use, often referred to as the gross development value. This before-and-after assessment underpins both the short-term facility and the planning for your exit.
Longer-term exit onto a commercial or residential mortgage
Once the conversion is complete and the property is let or trading, the plan is usually to refinance onto a standard commercial mortgage (if converting to commercial use) or a residential mortgage (if converting the other way). Lenders will reassess the property at that point based on its completed condition and income.
Rental and business income assessment
If the plan is to let the converted property, lenders will assess the achievable commercial rent once you refinance. If you'll trade from it yourself, lenders will look at the trading business's ability to service the eventual commercial mortgage.
Title, access, services and environmental checks
Before committing, it's worth checking the title for any restrictions on use, confirming suitable access for the intended commercial use, checking the adequacy of services (power, drainage, data), and considering any environmental factors relevant to the new use.
Step-by-step process
- Confirm the planning position — permitted development or a full application
- Arrange a valuation covering current and post-conversion value
- Secure short-term funding for the purchase and works
- Complete the works and any required building control sign-off
- Arrange your longer-term commercial or residential mortgage
- Refinance to repay the short-term facility
Risks
Planning permission can be refused or delayed, works can cost more or take longer than expected, and the property's value once converted may be lower than anticipated. Your property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it, so it's important to build in contingency before committing to the project.
Who provides the advice and how it is paid for
Commercial Services are referred to a third party. Neither The Mortgage Genie nor PRIMIS are responsible for the service received.
The Mortgage Genie does not provide commercial mortgage advice. Our team will discuss your requirements and, where appropriate, identify a suitable partner adviser. We will explain who they are and obtain your permission before sharing your details.
We do not charge for commercial mortgage advice, because we do not provide it. The specialist will disclose its own fees and how it is paid before you decide whether to go ahead.