Converting house into flats

[mlangley1]

Hello,
My mother owns a 4 bedroom house in clapham, london. The house was worth 1.4 million when last valued in December last year.
My mother has £70,000 left on mortgage but only an income of £8k p/a
Her low income makes it very hard for her to get a mortgage
I believe it is very important for my mother to keep hold of this property as there is planned regeneration work in an already affluent area so cannot see these house prices declining.
As she would like me to get on the ladder we have looked at the possibility of converting the house into flats. It currently has enough square meterage required by the council and both adjacent properties have fully extended although there are few examples of conversions like this on the road.
So the plan would be to convert the house into 3 self contained flats. 1 x 3 bedroom, 1 x 2 bedroom and 1 x 1 maybe 2 bedroom flat. One for my mother, me and one rented.
This would provide funds from the rented flat to pay of remortgage and my rent to support my mother as a pension.
I have estimated work to cost £220000. This would include loft extension, ground floor side extension and a second storey extension. The house will also require some underpinning but this is not a huge problem.
We would need to remortgage to raise funds for the work roughly £150,000.
My mum would have liked for us to buy a house together as she is getting older but have explained that I need my own space and see this as a great option to be close, keep the house as an investment and to stay in the area.
It may also be detrimental to turn I to flats as I reality I am not sure wether this would add on that much value than if we renovated into a family home and sold but that would mean losing the house.
I would love some advice on the following:
Has anyone undertaken this kind of project and have any advice?
Are there any legal/tax implications we should be aware of especially if selling after conversion?
Does this sound like a good idea?
Is my budget realistic?
Where is the best place to get advice?

 

[Anonymouse72]

you might get some info on Landlordzone, i'm sure someone on there will point you in the direction of something similar for developers.

 

[Billmccallum]

I suspect that £150,000 may be at the "budget" end of the scale.

When converting a single dwelling into separate units you will have to include substantial additions in terms of soundproofing & fireproofing, not to mention splitting the power/gas/water supplies, add to this the potential expense of under-pinning.

Without having plans to view, a rough estimate would be closer to £300K for a decent job.

You could look at a bridging loan rather than mortgage, if you plan to sell one of the flats on completion. A quick look at rightmove shows the lowest price 3 bed flat in Clapham at £285K.

Do the conversion and sell to 3 bed flat to pay the bridging loan, leaving you with two flats with no mortgage.

 

[businessfunding]

I
You could look at a bridging loan rather than mortgage, if you plan to sell one of the flats on completion. A quick look at rightmove shows the lowest price 3 bed flat in Clapham at £285K.

Do the conversion and sell to 3 bed flat to pay the bridging loan, leaving you with two flats with no mortgage.

That will be a pretty ropy flat in a dodgy area.

A mediocre on in any sort of location will be £500K +

 

[mlangley1]

I suspect that £150,000 may be at the "budget" end of the scale.

When converting a single dwelling into separate units you will have to include substantial additions in terms of soundproofing & fireproofing, not to mention splitting the power/gas/water supplies, add to this the potential expense of under-pinning.

Without having plans to view, a rough estimate would be closer to £300K for a decent job.

You could look at a bridging loan rather than mortgage, if you plan to sell one of the flats on completion. A quick look at rightmove shows the lowest price 3 bed flat in Clapham at £285K.

Do the conversion and sell to 3 bed flat to pay the bridging loan, leaving you with two flats with no mortgage.

Hi Bill,

Thanks for reply.

My actual budget for work is 220k I only need to raise 150k of it through remortgage. 100k a flat is a good rough estimate I think but I will be undertaking all plumbing, most electrical work myself. I also have a good team of builders so believe the 220k estimate will get us there but of course problems can arise .

A bridging loan for us would not be an option as we would aim to rent not sell.

As with prices a 1 bedroom flat which requires work has just gone on at 499k in the area

 

[Talay]

It should be fairly easy to see whether developers are chopping up houses to make flats or putting flats back together as houses.

My money is on putting flats back together as houses.

Of course, the real question is what the OP's mother wants and believes, as it is her house. The OP would benefit equally if they simply sold the property, invested a chunk for mama and bought her and him a nice flat each.

The longer term question is whether the OP is a single child and looking to inherit the property by himself ? If so, then capital gains should be investigated now and perhaps gift the property and hope for 7 years.

If they looking at multiple siblings all going to share the spoils when mama dies, then again, capital gains will come into play unless gifted and the house will presumably be sold at that point, making the argument for a sale now all the more reasonable prior to interest rate rises.