Most investors avoid listed buildings like the plague. To be fair, if you don’t have the know-how, then you’re avoiding them with good reason. It’s true, things can go wrong when refurbishing a listed building and they can become costly projects. However, these risks can be mitigated with the right people and processes, which I’ll share in this article.
Listed buildings provide huge benefits to savvy investors who are willing to take on the challenge. Coming up, you’ll see that there are some hidden advantages that people miss due to fear.
Before touching on some of the fears that surround listed buildings, let’s look at the benefits of having one in your property portfolio, as an investor.
Location – You tend to find many listed buildings in the centre of a town or city. It’s almost like they were the buildings that the surrounding areas grew from, which means they’re close to everything. This is especially useful if you plan to use them for serviced accommodation (SA).
Style – Many people, especially holiday goers, love the quintessential English building. They want the fireplace, the cool coving and the nice doors. They want something ‘Instagramable’ and many listed buildings provide just that.
Less Competition – Because of the fear surrounding refurbishing or converting listed buildings and some of the difficulties that come with them, like getting lending, you tend to find fewer people willing to invest in them. This lack of competition can open the door to bargains and substantial discounts upon purchase.
Before you go out hunting for a listed building to buy, you need to know the different types of listed properties you’ll come across and the red tape that comes with each one.
Conservation Areas: These are zones where the council want to preserve what the area looks like. Conservation areas are home to things like tree protection orders (TPOs) and sometimes make it harder to change a property's exterior, including making alterations such as installing double glazing or UPVC windows.
Grade II Listed Buildings: Roughly 91.7% of all listed buildings are Grade II. Grade II listed buildings encompass properties with unique features or unique buildings in a local area. Most buildings built between 1700-1850 are Grade II listed.
Grade II*: These are buildings that are not typical of an area or the country. They’re classified as ‘particularly important buildings of more than special interest’.
Grade I: Grade I listed buildings are where the complications start. These are things like manor houses, churches and stately homes. With a Grade I listed building, everything from the plaster to the door mouldings, can be protected, making it difficult to conduct any work on the property.
World Heritage Sites: Unless you’re planning to refurbish Hadrian’s Wall, this one shouldn’t be an issue. World Heritage sites are things like castles or historical monuments.
World Heritage sites sometimes have a ‘buffer zone’ where anything within it is automatically listed. For example, with Hadrian’s Wall, there is a 100m buffer zone surrounding it. If you buy a barn in this zone, begin groundwork and unexpectedly find the skeleton of a Roman, you could be in for some serious problems.
It sounds cliché but have a strong ‘power team’ behind you. Get the right trades and an architect who knows what they’re doing. However, I’d say, the most important member of your team and the one you should consult first, is a heritage consultant.
For a few hundred pounds, a heritage consultant will be able to tell you how protected the property is and what you can get away with.
There are workarounds with listed buildings that you can use to make getting planning permission easier. For example, if a building is on the ‘Buildings at Risk Register’, you can demonstrate to your local council that you’re preserving the property, which gives you more scope on what you can do with it. There are exceptions, like intricate carvings inside a church, which can be hard to work around.
Another workaround that I’ve found with listed buildings and heritage assets, is that conservation officers love them. This means they’re more likely to give free advice and work with you, rather than against you. You can get through planning quicker, if you have a conservation officer onsite, who is as emotionally invested in the project as you. However, the downside is that if they spot something when they’re on site that they want to retain, like a specific feature, this can cause problems later down the line.
Saving the best till last, there are two hidden perks of working with listed buildings that can make and save you a substantial amount of money. Think of these as ‘superpowers’ that you can employ, when dealing with the planning office at your local council.
You can put an argument forward that you can protect, preserve and enhance a listed building – particularly if it’s on the Buildings at Risk Register – but to get the money to make it possible, you need planning permission to develop another piece of land locally.
Conservation trumps building regulations. This is a useful way to get around EPC ratings and other costs. For example, if a building is listed, you can sometimes avoid insulating all the internal walls. This is the kind of thing you wouldn’t get away with on a newbuild flat or commercial conversion.
One of the main things to be careful of with listed buildings, is the fact that they can take longer to refurbish and convert. Decisions from the council take longer and often, building tasks take longer. For example, we have over 4m high ceilings at our church conversion. A normal plasterboard for a new-build ceiling is 2.4m. It takes a lot longer to board, plaster and paint at that height, so that time will turn into added materials and labour costs. If you’re developing the building, then be wary of how this extra time will impact your finance costs.
With listed buildings, it’s important that you get your ducks in a row at the start. The last thing you want to do is get midway through a development, just to learn that you’re plans aren’t viable, or that they’re going to cost you a small fortune to carry out.
If you want advice about dealing with listed buildings, or you need an extra set of eyes to look over an ongoing project, then get in touch using the details below.
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Email: anthony@therocketgroup.co.uk
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