Converting a commercial property into a residential property is a smart move – there is an overabundance of commercial properties, many that have been standing vacant for months or years. Equally there is a shortage of housing (and lots of media coverage about the pros and cons of new build projects) – it really is a no brainer.
Commercial properties include pubs, care homes, shops, offices, schools and many more.
However, many investors don’t realise that a commercial property without a tenant in situ is not mortgageable. Commercial lenders’ main concern when considering whether to grant a mortgage is ‘will the borrower be able to pay the loan back?’. As far as they’re concerned, no tenant equals no income. No income equals no ability to service the loan, so they won’t lend.
Many vacant commercial properties remain for sale for a considerable time. This is simply because would-be buyers lack...