Several months into 2025, the good news is the property market is in a far stronger, more stable position today than it was a year ago. The bad news is the UK is still facing a significant undersupply of homes.
How will this be resolved? To answer that is no easy feat, but what I can say is specialist lending will continue to play a vital role, owing to the flexible and fast-paced nature of the tailored loans we can provide. Not forgetting our ability to offer faster decision-making, which will be pivotal as mainstream lenders who have tightened their lending criteria in response to the Bank of England’s unpredictable rate cycle struggle to deliver quick turnarounds.
Nevertheless, each year presents new opportunities for brokers to support their borrowers, with 2025 being no exception. The trick is to identify what is needed and where the demand is, which leads me to sustainable investing. Sustainable and socially responsible investing, also commonly referred to as ESG investing, considers environmental, social, and governance factors alongside financial returns.
Whether your borrower is looking to take a more sustainable approach to housing development, play their part in creating a better future, or looking for a new opportunity altogether, converting property from commercial to residential is a win-win situation.
It doesn’t matter where you look throughout the country, the substantial number of store closures are turning certain areas into ghost towns. The need for investors and developers to reimagine what our towns and cities will look like in the future is therefore crucial. Securing a good deal on a commercial building, which is situated in a desirable location and can be transformed into residential property, has the potential to help investors and developers achieve significant capital growth while supporting the housing shortage movement and demand for affordable homes at the same time. It will also result in investors and developers being able to undertake sustainable practices with repurposing existing commercial buildings, often more eco-friendly than tearing down and building from scratch.
Now, if we were talking about this before 2015, we’d have to discuss the range of restrictions and barriers in place. However, all thanks to the UK government’s major changes to the General Permitted Development Order (GPDO), it’s now far easier to carry out a commercial-to-residential development, hence why there are an increasing number of property buyers cashing in on the opportunities that this type of conversion offers.
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For borrowers looking to capitalise on this, there are still a few elements that need to be considered, however. Firstly, while most commercial premises are now eligible to be converted without having to work around any regulations, there may be some potential exceptions. Listed buildings – properties with national parks or conservation areas – may be trickier. Some might be acceptable to convert, but full planning permission may be required beforehand, or design plans might be limited by official guidelines. Not forgetting there are different sets of rules between local authorities, where some areas have more limited development rights than others.
This leads to my next point of figuring out if planning permission is required. While some conversions don’t require planning, approval from the local council will still need to be granted.
Thirdly, while this kind of development can generate a fantastic investment, I’d highly recommend that borrowers budget wisely from the get-go. As I’m sure doesn’t come as a shock, this type of project can involve a lot of work from building costs and so forth. While this by no means should dissuade a borrower, it’s more of a precaution, just in case any unforeseen site challenges present themselves or any changes and modifications need to be made during construction.
If the above is all taken into consideration, converting a commercial property into residential is most definitely a lucrative investment opportunity not to ignore. Not forgetting the positive impact this will have on our environment and reviving our high streets, while creating much-needed additional housing. Our advice is to start finding sites to target now, as it will be the property entrepreneurs who act fast who will find the best opportunities.
