A guide to converting a barn and how to fund it

Published: 19th December 2008
Views: N/A

If you take a look at most of our rural areas you will be amazed to see just how many farm lands have run down barns on their land ideal for renovation or converting from a disused barn to a stylish and exclusive family home.

Obviously the first trick is to find such a barn, many landowners will offer such properties through the normal channels such as estate agents and auction houses however there is no substitute for actually going out into the area you would like and seeing just what is lying in a derelict state or simply not really used.

When a suitable project is located the first most obvious question is does planning permission exist to convert the barn to a residential property, if not extreme caution is needed as the local council may decline any new proposal leaving you with a barn but very little scope for development and possibly a complete waste of money.

If there is planning permission check out any stipulations or restrictions in it as these could limit the potential to develop it as required such as keeping within the current buildings foot print, another crucial area to look at is if there are any agricultural restrictions on it such as you can only buy it if you keep livestock in the area, whilst you mind find that an attractive proposition someone looking to buy the barn in the future may not and it would damage the future sale value. On the same subject should you be looking to obtain a mortgage to fund the purchase or build (or both) any potential lender would probably decline the application on the grounds of an agricultural tie.

Quite obviously a barn is probably going to be the countryside hence care should be taken to take note of any wildlife issues such as bat colonies as if they are in residence or nearby the whole project could be put on hold or even cancelled until the issue is resolved.

Another overlooked point is the matter of access, firstly does the local land owner or even the seller have any rights over any roads or land that could cause a problem in the future, then you need to consider how any delivery vehicles are going to get to the barn to deliver supplies of bricks etc.

However to move on let's assume that all the initial enquiries seem to point to it being a viable option you will now need to look at the funding options for such a project in other words the total funds required for both the purchase and all the associated build costs, when looking at the build costs always leave an amount aside for contingency (normally at least 10%), failure to do this could leave you short of funds with an unfinished project.

A lender will look (firstly) at three main areas when assessing their agreement to lend on such a project

1 Initial Cost Of Purchase

2 Costs of the Build

3 End Value of the Finished Project

Once these appear to fit (on paper) the lender will look at the applicant (credit score income etc) then they will look at the applicants plans for the conversion taking into consideration who will be doing the work, what certificates will be available when the build is finished and who (if any one) will be supervising the work (such as an architect or surveyor).

Having the notion or belief that you will be able to carry out the work yourself will not impress any lender they will want to see the project is financially sound and properly managed as their funds will be tied up in the project and they need to be confident their money (and security will be safe).

Most barn conversions are funded via a self build type of mortgage where the lenders will release a percentage of the purchase price then the remainder (for the build) in arrears at the end of each stage once their surveyor is satisfied the build is up to standard and has added the correct value at each stage, importantly its the lenders surveyor who they will rely on to confirm all values etc are correct hence if you purchased the barn for £100,000 but if their surveyor values it at £80,000 then that is the value they will work from not your purchase price.

Whilst their is obviously a great deal to take into consideration when planning such a project even in today's financial climate a well thought out and well built project an not only produce a dream family home but also a property that can gain a large amount of equity in it at the finished stage.

As with most things in life you will always be advised to seek the services of a specialist broker when looking to fund such a complex but worthwhile venture.



http://www.ownbuild.co.uk/barn-conversion-mortgages.htm


Report this article Ask About This Article


Loading...
More to Explore