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In the current property development landscape, the question of whether to sell your house or convert it into flats is increasingly relevant due to the recent announcement that homeowners will be able to turn their properties into converted flats without the need for obtaining planning permission. 

This article will explore the current requirements and upcoming changes for obtaining planning permission for flat conversions in the UK, delve into the costs involved and discuss the potential benefits of selling your house for cash, providing you with an in depth guide to help you make an informed decision.

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What are the converting a house into flats regulations?

Converting a house into flats regulations will vary depending on your area and local authorities, however here are some of the nationwide regulations and considerations to ensure compliance an viability:

Permitted Development Rights (PDR) for House to Flat Conversions

The UK government has introduced a new Permitted Development RIght that allows for the conversion of a house into two flats without the need for requiring full planning permission, provided the exterior is unchanged. 

The new right is planned to be implemented in 2024, following a consultation process.The change is expected to streamline the development process, reduce red tape and potentially increase housing availability. 

Not all properties are eligible for Permitted Development Rights, and there are constraints on both the size and number of units that can be created. 

Planning permission and building regulations

To subdivide a house into multiple units, planning permission is usually required, especially if the property is a listed building or located in a conservation area.

Conversions require approval under the Building Regulations, which may include consultations with the Fire Service for fire escape issues and compliance with the Housing Act 2004 for houses in multiple occupations. 

Here’s a breakdown of the regulations:

Fire Service Regulations

  • Fire Risk Assessment: A comprehensive fire risk assessment is essential to identify potential fire hazards and to plan necessary precautions.

  • Means of Escape: There must be adequate and safe means of escape in case of fire. This includes properly planned escape routes and exits that are clearly marked and unobstructed.

  • Fire Detection and Alarm Systems: Installation of appropriate fire detection and alarm systems is critical. These systems should be designed to detect fire early and alert all occupants.

  • Firefighting Equipment: Depending on the size and complexity of the building, suitable fire fighting equipment like extinguishers and fire blankets should be readily accessible.

  • Fire Resistant Materials: Use of fire-resistant building materials, especially in construction of walls, floors, and doors between flats, to prevent the spread of fire.

  • Emergency Lighting: In case of power failure, emergency lighting systems should be installed to ensure escape routes and exits are visible.

  • Consultation with Fire Authority: It's advisable to consult the local fire authority for guidance on fire safety measures and compliance.

Housing Act 2004 Considerations:

  • Licensing of Houses in Multiple Occupation (HMOs): If the converted flats qualify as a House in Multiple Occupation (HMO), a licence may be required from the local authority. This is typically the case when flats are rented out to multiple tenants who share facilities like bathrooms or kitchens.

  • Minimum Standards for HMOs: The Act sets out minimum standards for the management, upkeep, and safety of HMOs. This includes fire safety, provision of adequate facilities, and maintenance of living conditions.

  • Room Sizes and Amenities: The Act may dictate minimum room sizes and require adequate provision of amenities like cooking and washing facilities.

  • Overcrowding and Management: The Act also covers issues related to overcrowding and requires proper management of HMOs to ensure tenant safety and welfare.

  • Building Regulations Compliance: The Act emphasises compliance with Building Regulations, particularly regarding structural stability, dampness, ventilation, and thermal comfort.

Considerations for Conversion

It’s important to plan a layout that meets safety and quality standards, considering issues like access, privacy, and communal areas.

If you have a mortgage on your property, you might need to renegotiate terms or consider remortgaging. Legal issues, such as changing the property from freehold to leasehold, need to be addressed. 

The potential for rental income and property value appreciation should be weighed against the initial investment and renovation costs. 

Potential challenges

Significant investment is often required for acquisition, renovation and legal and regulatory expenses. 

Navigating planning permissions and design alterations can be complex, and unforeseen complications may arise. 

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Do you need planning permission to convert into flats?

Currently, converting a house into flats usually requires planning permission. In order to obtain planning permission in the UK for your converted flats, you can follow these steps:

  1. Planning permission: You need to apply for full planning permission to convert a house into flats or change the number of units within a building. This process will assess factors like the impact on the neighbourhood, building regulations and local housing needs. 

  2. Listed building consent: If your property is listed, additional permission is required due to the historical significance of listed properties.

  3. Lawful Development Certificate: Applying for this certificate provides legal proof that your proposed conversion is lawful, which can be particularly useful if there are ambiguities in planning regulations. 

  4. Pre-planning application advice: Before submitting a full application, seeking advice from the local planning authority can provide insights into the likelihood of approval, and help you tailor your application.

  5. Application process: To apply, visit the National Planning Portal. This online resource guides you through the necessary documentation and local council requirements. 

Are there different rules depending on the amount of flat conversions you want?

Yes, there are indeed different rules and considerations depending on the number of flat conversions you’re planning in the UK. When turning a house into flats, the first step is to assess the Gross Internal Area (GIA) and ensure it meets the minimum space standards for each flat.

However, this calculation becomes more complex sas you increase the number of flats, as you must factor in communal spaces, which do not count towards the GIA of individual flats. For example, within a two storey Victorian house conversion. Shared areas like staircases to the first-floor flat must be deducted from the total GIA. 

The rules also vary based on council policies, especially concerning the preservation of family dwellings. Many councils resist the conversion of family homes into multiple smaller units, like studio flats, due to a preference for maintaining larger family orientated dwellings.

This is particularly important when considering conversions into three or more flats, as each unit must meet specific standards for access, kitchens, bathrooms, utilities and living spaces.

Additionally, the placement of plumbing and other services must be strategically planned for efficiency and tenant comfort. If you are turning a house into 2 flats or more, you should take into account that the more intricate these considerations become, requiring careful planning and consultation to ensure compliance with both local and national regulations. 

What changes are coming for flat conversions 2024?

Released in the Autumn budget, the UK Government announced it is planning to introduce a new rule that would allow property owners to convert a house into flats without the need for planning permission under the ‘permitted development rules.’ 

The Permitted Development Rights Expansion is being introduced in response to housing shortages and the need to streamline development. These changes could facilitate faster conversions, increasing housing stock, particularly in areas with acute shortages. 

The rule stipulates that the external appearances of the building must not change and local authorities can make amendments to permitted development rights within their areas. As local authorities can adjust these rules, the impact and application of these changes may vary across different regions. 

Concerns have been raised about the potential impact on community character and the quality of housing resulting from the easier conversion process. The policy is set to be consulted on and is expected to be implemented later in 2024.

How much does a flat conversion cost?

The cost of converted flats usually ranges from £15,000 to £25,000 for basic modifications. This estimate includes putting up stud walls, installing bathrooms, and central heating units. 

However, the actual cost will vary depending on these factors:

Size of the property

Larger properties or those requiring more extensive work can increase costs.

Number of flats

The more units you are creating, the higher the cost due to additional materials, labour and potential complications in layout design.

Builders and materials

The quality and cost of builders and materials chosen will directly impact the overall cost.

Additional considerations and costs
  • Planning consent: Obtaining necessary permissions can add to the cost.

  • Building regulation approval: Ensuring the conversion meets all regulations.

  • Utilities: Fitting new metres for gas, water and electricity. 

  • New kitchens and bathrooms: Costs for installing additional or updating existing facilities.

  • Finance for development: Interest and fees associated with loans or mortgages.

  • Separate heating and water systems: Installing independent systems for each flat.

  • Second entrance: Creating an additional entrance, if required.

  • Decoration: Interior and exterior finishing and furnishings.

  • Duration of Project: A conversion may take up to 6 months, during which time there may be additional costs like property taxes, insurance and security.

Moreover, for funding the project, standard residential mortgages are usually not suitable. Specialised development finance or an HMO mortgage (if you plan to rent out the flats) may be required, adding to the overall financial considerations.

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Is it worth converting houses into flats?

While carrying out work on your house to become a converted flat can be financially rewarding, it requires careful consideration of market demand, tax implications, legal requirements, and the balance between initial costs and potential returns. 

Financial advantages

Converted flats can offer significant financial benefits, particularly in large cities like London where rental and resale values are high. This process can generate substantial income and increase the property’s overall value.

However, the worthiness of such a conversion largely depends on the housing market demand in your area. In regions where flats are in high demand, the conversion can be far more lucrative. 

Tax considerations

A key aspect to consider is the tax implications of converting a house into flats. If selling the flats, the profit generated will influence your tax liability, including potential Capital Gains Tax

Currently, residing in one of the flats might offer some tax relief, but these policies are subject to change. It’s essential to consult with a tax specialist to fully understand these implications. 

Additionally, you will also need to make sure you are complying with the legal and planning permissions to avoid penalties. 

Flat conversion mortgages

The decision between converting to leasehold flats or retaining a single freehold impacts the financial outcome. Leasehold conversions often result in a higher collective value, but they require creating individual leases for each flat.

If considering leasehold mortgages for each flat, the collective value may increase. However if you plan to keep the freehold and rent out all the flats, the overall property value might increase but may not match the collective value of multiple leaseholds. 

Cost vs Return 

The initial investment for conversion, including construction, legal fees and taxes can be substantial. It’s vital for you to analyse whether the potential return justifies these costs. 

Your long-term strategy whether renting or selling the faults will also impact the financial outcome. Renting provides a continuous income stream, while selling leads to a one-time profit. This decision should align with your financial goals and market conditions.

What are the alternatives to turning a house into flats?

If you’re considering alternatives to turning a house into flats, there are several other options that may suit your goals, whether they’re related to generating income, maximising property utilisation or simply transforming your living space. Here are some alternatives:

  • Renting the house as a single unit

Instead of converting the property, you could rent out the entire house, as this approach avoids the complications of a conversion and can still provide a steady income stream.

  • Short term rentals or holiday lets

Utilising the property as a short-term rental or holiday let, especially in tourist-friendly areas, can be lucrative. Services like Airbnb make this option increasingly accessible and manageable. 

  • Extending or renovating the property

Improving and extending the existing structure, such as with a loft conversion or an extension, can increase the property’s value and functionality without the need to convert it into separate flats.

  • Developing a home office or business space

Transforming part of the house into a home office or business space can be an alternative revenue stream, especially with the rise in home-based businesses and remote work.

  • Creating a multi-generational home

Adapting the house to accommodate multiple generations of the same family can be an alternative to formal subdivision, offering shared living space while maintaining privacy.

  • Selling the property

If the primary goal is to release capital, selling the property outright might be the simplest option, avoiding the complications and costs associated with conversions. 

  • Lease to a Housing Association

Leasing the property to a housing association for social housing can provide a steady income and contribute to addressing housing needs in your community.

  • Land development

If the property includes a sizable amount of land, you could explore options for developing the land separately, such as building additional structures or selling or leasing the land for development. 

  • Mixed-use properties

Converting the property into a live/work unit, where part of the space is used for commercial purposes and the rest for residential, can be an innovative use of the space.

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Why is turning a house into flats hard?

Turning a house into flats is a challenging task primarily due to the extremely complicated blend of regulatory, financial and practical hurdles involved. 

Firstly, there are currently stringent regulatory requirements, including the need for planning permissions and adherence to building regulations, which ensure the safety and suitability of the property for multiple households. 

These regulatory requirements can be particularly demanding when it comes to aspects like fire safety, sound insulation and separate utility connections. 

Financially, the process demands a significant investment for construction, legal fees and potential unforeseen expenses, coupled with the risk of fluctuating property markets that can affect the return on investment. 

Additionally, finding suitable financing for such a project can be more complicated than for traditional property purchases or renovations. 

From a practical standpoint, the physical conversion often involved complicated restructuring to create self-contained units, which can be particularly challenging in older buildings or those with limited space.

This restructuring must be done without compromising the functionality and appeal of each individual flat. 

Furthermore, managing a multi-unit property involves ongoing commitments like maintenance, tenant management and additional administrative tasks, adding layers of complexity compared to managing a single-family dwelling. 

What are the cons of converting a house into flats?

Converted flats in the UK, while appealing to many developers and homeowners, comes with its share of challenges. Firstly, obtaining full planning permission from the council can be a cumbersome process, and for certain projects ‘prior approval’ may be required.

In cases where you’re converting unused offices or parts of a larger building like a Victorian house into residential flats, compliance with space standards, insulation requirements and adequate daylight becomes vital. 

The cost per square foot for such converted flats can escalate quickly, especially if the building is older or has features like a loft or communal garden, which require careful integration into the new design. 

For maisonettes or studio flats within a larger development, ensuring each unit has sufficient floor area, amenity space and storage can be challenging. 

There’s also the aspect of communal areas and their maintenance, which can complicate things for both the landlord and occupant. 

Additionally, the conversion might affect the building’s overall character and could potentially make the flats difficult to sell or rent out, impacting the property ladder dynamics for renters and buyers alike. 

It’s worth noting that converted flats, unlike purpose-built ones, often have to cope with issues like suboptimal layout, lack of separate entrances or inadequate sound insulation. 

Lastly, new regulations such as those introduced after April 6th, 2020, regarding cladding and fire safety, have further tightened the requirements, making conversions not just costly but also more complex in terms of compliance and safety standards.

What should you know about selling flats?

When selling flats in the UK, it’s important to understand several key factors to ensure a smooth transaction. Firstly, you will need to recognise the nuances of selling a leasehold property, as most flats fall under this category; the length of the lease is particularly important since shorter leases can affect the property’s value and saleability.

Prospective buyers will be interested in service charges, ground rent and details about the property management and freeholder, so having this information readily available is crucial. 

Ensuring that all necessary documents, including the Energy Performance Certificate (EPC) and lease agreement, are in order is also very important, as this will smooth the entire process. 

If the flat is not your primary residence, you may not be eligible for Primary Residence Relief, and therefore will be liable for Capital Gains Tax on any gains you get from selling the flat.

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Should I sell my house or convert it into flats?

If you are considering whether to sell your house or convert into flats, selling your house for cash can be a highly beneficial option. This is because selling your house for cash provides immediate liquidity.

This is especially advantageous if you need quick access to funds, whether it’s for personal reasons, investing in other opportunities, or if you’re relocating. 

The process of selling a house for cash is usually much simpler and faster than going through a traditional open market sale or going on a conversion project. There’s no need to worry about long, complicated negotiations, property showings or waiting for buyer mortgage approvals. 

Turning a house into flats involves significant renovation costs, time and the stress of dealing with construction, contractors and regulatory compliance. Selling for cash eliminates these challenges. 

Managing a multi-unit property can be time-consuming and stressful. Selling your house for cash frees you from these responsibilities allowing you to focus on the other joys of life. 

Property markets are often unpredictable, but by selling for cash you avoid the market risks associated with holding and renting out the property, such as fluctuating rental markets, tenant issues, and ongoing maintenance costs. 

If your financial situation doesn’t comfortably allow for the investment needed in a converted flat project, or if you prefer not to deal with loans and the associated interest, selling for cash is a straightforward alternative.

Selling your house may have simpler tax implications compared to the complexities of renting out multiple flats, which can involve dealing with rental income tax and potential capital gains.

If the housing market is favourable for home sellers and vendors, you might achieve a lucrative sale, potentially more advantageous than the long-term returns from converting and renting out flats. 

How can The Property Buying Company help?

At The Property Buying Company, we are a leading UK cash buyer with over 100 years of combined experience in the house selling and buying industry. We are the UK’s most rated cash buyer and have helped thousands of people move house over the past 12 years. 

We believe that selling a house shouldn’t be complicated or time consuming, which is why we will handle all aspects of the house selling process for you. This includes covering all the fees usually associated with selling a property, including your solicitor fees. 

We have our own cash reserves ready to purchase your property on a timescale that suits your needs, be that in as little as seven days or three months, we will tailor our service to you.

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Tom Condon

Tom Condon, one of our content writers, has fascinating expertise in sustainability in the property industry. Tom thoroughly understands the market and has experience in both residential and commercial property. He enjoys attending conferences and staying current with the most recent property trends.