Is This Conversion The Right Thing To Do?
Transcript of Is This Conversion The Right Thing To Do?
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Is This Conversion The Right Thing
To Do?
Chris Leney, Partner, Robinson & Hall
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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
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The Next 25 Minutes
• Set the scene
• Should you use PDR?
• Should you be converting this building?
• Financials
• Tax
• The market
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Setting the Scene
For Conversion
Grain Store G P Building Listed House
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Setting the Scene
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Setting the Scene
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Setting the Scene
For Conversion
Grain Store
G P Building
Listed House
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Should You Use
Permitted 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?
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Setting the Scene
For Conversion
Grain Store
G P Building
Listed House
Old Workshop
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Should You Use
Permitted 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?
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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
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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?
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The Financials
Residential
• Cost of conversion £360,000?
• Converted value £550,000?
• Rental income £18,000
• Yield on expenditure 5.0%
• Yield on value 3.2%
BUT
• Devaluation of rest of holding
• Taxation issues
• Cost of finance
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The Financials
Commercial
• Cost of conversion £260,000?
• Converted value £385,000?
• Rental income £24,000
• Yield on expenditure 9.0%
• Yield on value 6.2%
BUT
• Devaluation of rest of holding
• Patchy Rental Market
• Taxation issues
• Cost of finance
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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?
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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?
• 3rd Parties on the holding
• Time / risk
• Is it right for you?