With the high cost and shortage of homes at the lower priced end of the housing market, buying a flat above a shop can be a reasonable option for some potential home-owners, but with a number of possible complications which could arise from the transaction, the services of an experienced conveyancing solicitor are essential.
Cities, such as London and Brighton, have hundreds of small shops in areas away from the busy main shopping centres which were built, usually in the Victorian or Edwardian eras, to serve the local communities around them. Most were intended for owner-occupiers where the shopkeeper worked below and he and his family lived above.
With social and commercial life having changed greatly in the last 30 years, far fewer business owners live at their premises but, unless the space is used for storage or offices, a flat still may be available at first or second floor level.
Most often accommodation will be rented out on a shorthold tenancy agreement with the shop below leased to a trader and the freehold owner being either an individual or company which uses its ownership as an investment.
However, leasehold or freehold flats above commercial premises do become available and are almost always cheaper than the equivalent size accommodation in a purpose-built block of flats or conversion from a house in a residential area.
In some major cities flats have been created from redundant office blocks and some property developers have looked at building above supermarkets to provide affordable homes.
Consider the type of business below
Potential purchasers should be aware of a number of aspects to consider when buying a flat over a shop, including the type of business underneath or adjacent to it. Apart from possible environment nuisance for the resident such as noise or smell, this is mostly important because of its effect on the valuation of the property both when buying and selling.
It will also be important that when the conveyancing lawyer conducts searches, the local authority records are checked for possible change of use of the business. A kebab shop may have more of an impact on the residents of a flat over it than a florist.
If the commercial premises present a higher than usual risk of fire or other liability, for example, a bar or chip shop, insurance premiums may be weighted for the flat residents to reflect this.
Having an independent access from the street is essential, although communal access with other flat owners or business users may be acceptable.
Rights to usage of areas such as a communal yard, loft or roof garden, parking space or storage facilities must all be specified in the contract of sale, either leasehold or freehold.
Occasionally a ‘flying freehold’ may be involved in a flat above a shop and responsibilities for this can be a particularly difficult area of property law which will need careful consideration before purchase. A ‘flying freehold’ can be described as part of a building which is in different ownership to the building beneath or around it, which is particularly likely to occur if an old building has been split into living accommodation of various sizes or parts have been sold to a neighbour.
Freehold or leasehold
Depending on the ownership of the whole building, there may be service charges to pay towards collective maintenance and these may well be more expensive than for a residential-only property.
Although some of the flats above shops which come onto the market are freehold and a purchase of one will not have many legal conveyancing differences to buying any other flat, most are leasehold with the various provisos attached to that type of property.
Because of the mixed commercial and residential use of the building, it is less likely that a leaseholder will be able to buy the freehold as is usually the case with conventional blocks of flats.
As with most less-conventional residential properties, obtaining mortgage finance to buy a flat over a shop is not as easy as with a standard house and mortgagees may need a larger deposit or face other restrictions.
Lenders will be guided by their valuer’s report on the re-sale value of a flat and this will include elements such as the location, condition and general surroundings of the property. If the market is difficult at the time of sale, the valuation is likely to be low because the bank or building society will be concerned about the security of its debt.
Although there are often advantages of cost and convenience when buying a home above a shop, the numerous complexities require the services of an experienced residential conveyancing lawyer to investigate and explain all the possible legal problems before a buyer is committed to the purchase.
Buying a flat above a shop with Healys
Whether you want to buy a flat above a shop in London, Brighton or elsewhere in the UK, our team of residential conveyancing solicitors can help you .
Whether the proposed flat purchase is freehold or leasehold, Healys has the expertise and, thanks to its links with other professionals, as well as the skills across its general legal practice, the ability to advise and give practical assistance.
For more information and advice on costs of Healys’ conveyancing services, you can request a call-back via the website or email email@example.com