Is This Conversion The Right Thing To Do?
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The document discusses the considerations for converting buildings, particularly grain stores, into residential or commercial properties, emphasizing the importance of location and compliance with planning regulations. It outlines financial aspects including conversion costs, potential rental income, and tax implications such as capital gains and inheritance tax. Key questions to consider include the building's convertible nature, the project's goals, and the expected return on investment.
Is This Conversion The Right Thing To Do?
- 1. Is This Conversion The Right Thing To Do? Chris Leney, Partner, Robinson & Hall
- 2. Introduction •Land and Property Professionals •Ipswich, Bedford, Colchester, Buckingham •From Suffolk Coast to the Cotswolds •Experienced team of Chartered Surveyors, Chartered Town Planners and Agricultural Valuers •Advice from conception to completion
- 3. The Next 25 Minutes •Set the scene •Should you use PDR? •Should you be converting this building? •Financials •Tax •The market
- 4. Setting the Scene For Conversion Grain Store G P BuildingListed House
- 7. Setting the Scene For Conversion Grain StoreG P Building Listed House
- 8. Should You UsePermitted Development Rights? •How do you obtain the best conversion and therefore best value? •Is the building convertible in its current form? •Demolition of adjoining buildings? •What if some of building was not in agricultural use?
- 9. Setting the SceneFor Conversion Grain Store G P Building Listed House Old Workshop
- 10. Should You UsePermitted Development Rights? •How do you obtain the best conversion and therefore best value? •Is the building convertible in its current form? •Demolition of adjoining buildings? •What if some of building was not in agricultural use? •Restrictive and negative approaches from planners. •Impact on PD Rights on the remaining holding. •What is the additional cost of getting full planning?
- 11. Should You Be Converting This Building? •What is the impact on the rest of the unit? –Grain Store –House –Location within holding •What is the best use for this building? –Residential –Commercial –Holiday lets –Other •Location, Location, Location
- 12. The Financials •Costs of conversion –Planning Costs –Conversion Costs –Services / Access •Values / Income –Can you sell if used PDR rights? –Sale .v. Lease –What return on investment are you looking for?
- 13. The Financials Residential •Cost of conversion£360,000? •Converted value£550,000? •Rental income£18,000 •Yield on expenditure5.0% •Yield on value3.2% BUT •Devaluation of rest of holding •Taxation issues •Cost of finance
- 14. The Financials Commercial •Cost of conversion£260,000? •Converted value£385,000? •Rental income£24,000 •Yield on expenditure9.0% •Yield on value6.2% BUT •Devaluation of rest of holding •Patchy Rental Market •Taxation issues •Cost of finance
- 15. Tax Issues Inheritance Tax •Change of status from agriculture •Increase in value and loss of APR? Capital Gains Tax •When to transfer and to whom? •Who can do the conversion? VAT •Treatment of VAT on works •VAT on income?
- 16. Summary •Should you be converting this building? •Location? •Is Residential the Right Use? •What are the tax implications of your proposals? •What are you trying to achieve? •Expected Return on Investment and how are you going to finance project? •3rdParties on the holding •Time / risk •Is it right for you?