Converting small Wellington commercial property into residence.

[John the builder]

Secondly, what you are proposing is a 'change of use', which requires a building to be as close as practicable to being 100% of the Building Code (ie: 100% NBS - new building standard). If you do not know that current rating, then it is impossible to determine what structural requirements may be needed - and therefore cost is unknown too. If the property is not listed as EQ Prone, it only needs to be over 33% of NBS to stay off this list - which is still a long way off being suitable for any form of conversion. Change of use will also trigger off bringing the balance of the building 'up to code', with fire requirements being a 'biggie'.

EQprone doent apply to residentil property under 2 story and less than 2 to 3 households

the change of use doesnt say 100%NBS

S115 says as "nearly as reasonable practicable for all clauses because there wasnt a household there before

These wouldnt be that hard? Fire requirements may be reduced and the same with structural loads on floos and the like because loads reduce

[RileyNine]

CitySlicker69, thank you. That's just the sort of info and insight I am looking for. And John the Builder also! Sorry, saw your response after I posted this.

I think the issue for me is there are too many unknowns and I don't think I will have the funds available to pay to to find out on the basis that I MIGHT bid on the property. Having already lost out on tenders where I had paid upfront to have inspections and so on done I am cautious about doing it too much now. I need to pick and choose where I do that as I can't do it for every place I see unfortunately.

No one seems to know quite what the current rating is on this property. That seems a bit of a warning sign to me. I know it would be quite expensive to have a full report done (6-8k?). I am also not in a position to borrow more money, residential or commercial. I changed careers (from IT to more creative) and the banks wouldn't even lend me bridging finance when I looked into it for normal residential. Getting into a situation where I buy then find out the costs isn't really going to work.

You are also correct about the banks not lending without knowing the current EQ status. That has been mentioned to me before.

When I spoke to the council about converting it this is what they said below. Again there are a lot of unknowns. It seems you don't know until you actually start planning things and have done a lot of work up front. The risk for me is not having any idea how much the costs are up front then not having the funds/means of getting funds to cover thing. Definitely proceeding with caution and I do appreciate peoples comments here. Definitely very helpful!

This is what the council said:

With regards to building consent, it is possible to convert a commercial property into a residential one.

The key aspect of this conversion though is that under the Building Act it is considered to be a change of use for the building, and you will require building consent for this conversion. When you’re carrying out this type of change of use, the Building Act requires us to make an assessment about the building’s compliance with regards to all aspects of the current building code requirements.

This means when changing the use of the building you will require a fire and structural report for the entire building, and will require comment and details for other aspects such as weathertightness details, sound proofing, and access routes. Obviously there is a bit of work and cost involved in collating this information so I recommend having a chat with a designer who has some experience in this area about what will be involved. The current owner may also have some building records that may be helpful in compiling this information.

Though we require this information so that we can make an assessment around the building’s compliance with current building code requirements, this does not mean that we will require you to bring the building up to full compliance. Rather we make an assessment around what upgrades would be reasonable to ask you to carry out based on the compliance of the building and the scope of building work that you’re carrying out. So for instance if your building is close to current code requirements and you’re only carrying out a small scope of works then it is unlikely that we would ask you to carry out a large amount of upgrades. However if there were serious non-compliance issues with the building, or you were looking to carry out a larger amount of building work then it may be that we ask you to carry out some larger and more costly upgrades to the building. Unfortunately this is a decision that is difficult for us to give you clear advice on without the reports mentioned above and a clear understanding of the building work that you’re planning to carry out. Again having a chat with a designer who has experience in this area may be beneficial.

The other factor you’ll want to consider will be whether resource consent will be required. With regards to that, I’ve forwarded your query on to the planning team, and they will be in touch with some advice around possible planning considerations.

[CitySlicker69]

No, properties that are under 2-storey or less than 2 to 3 households simply aren't assessed for Councils EQ Prone Policy. A change of use from Commercial to Residential overrides this, irrespective of the number of units created. This is why knowing the current % of NBS is imperative. Everything is essentially at Councils discretion. They may be comfortable with this property being at 70%+ for a change of use, but if it is only at 35% now, you are a wee way off - not to mention potential issues with Insurance and Finance on anything that is below 65% of NBS

[John the builder]

It is rubbish to apply %NBS to change of use

34% is only something dreamed up to deal with EQprone and this doesnt apply to the propsed use. any talk of %NBS suggests confusion with EQprone. Where do you get this from otherwise?

Riley nine

Do you have building plans for the existing? Send to engineer and ask him if structural issue insurmountable or costly they can generally make intuitive guesses. I assume there are rooms there already? and kitchenette.

If planning are OK you have dealt with the main issue.
Change of Use needs to be managed
has anyone lived there before?

If you don't have a family to consider buy it and bunk down where you can while you deal with the issues

[CitySlicker69]

Hopefully the Agent has provided you with a LIM report? If the property is pre-1976, then an IEP (EQ Assessment - desktop) will have been done on the property by Wellington City Council. Post 1976 - then it may not have been.
Either way, it is my experience that a Vendor that DOES NOT find out (or state) the EQ rating of their property, is generally because they are aware it is low. The value benefits of having a property in excess of 65% NBS far outweighs the likely $6-8,000 for the Detailed Analysis report for such a property.

BUT ..... the properties current % of NBS is no indication of what it may cost to bring it up to say 65%+. I have seen a warehouse property get up from EQ prone to over 70% at a cost of $5,000 for some bracing, and others that may currently be at 50%, but cant be raised any higher due to neighbouring properties, and the amount of 'pounding' that the building will receive in an EQ due to them. This of course cant be rectified unless the neighbours are knocked down!

Anyway, have fun ... and at least this has been a good 'test case' for you, even if you elect to not proceed further. Cheers

[CitySlicker69]

It is rubbish to apply %NBS to change of use

34% is only something dreamed up to deal with EQprone and this doesnt apply to the propsed use. any talk of %NBS suggests confusion with EQprone. Where do you get this from otherwise?

The current building code is essentially 100% NBS. If a property is not 100%, then it does not meet 'current' new build standards. A change of use requires it to be up to 'current code' or as close a possible - so % of NBS is of importance to ANY property that is facing a 'change of use'.

[RileyNine]

The LIM arrived just today. I am not an expert at reading them but there are a few bits of info I can see that might be important. The building looks like it was put up in 1972.

It is also not EQ prone. There is information about the IEP in the LIM and it seems an assessment was done. If I am reading the results correctly it was at 43% NBS (in 2009 when it was done I guess) which is grade C. Someone who knows what they are looking at might be able to interpret the results to say where improvement might be required.

Other than that I can't see anything significant in the LIM. I will have experts look of course.

Simon

[John the builder]

A change of use requires it to be up to 'current code' or as close a possible - so % of NBS is of importance to ANY property that is facing a 'change of use'.

it is a mistake to use NBS

the s115 says nearly as practicable with (among other things) structural performance and fire performance. It doesnt say 'new Building Standards' or even mention 'new building'?

[Kbkiwi]

Firstly, a 200sqm site is not a large enough size to be viable for redevelopment. Even if you are in an area that allows a 6-storey height limit, as you develop higher- you face additional requirements such as secondary egress and lifts etc, which all eats into the useable space of a development.

Im not sure what neck of the woods your in, but there are plenty of recently built Wellington apartment buildings on land smaller than 200sqm. Lots of very narrow & tall developments.

[RileyNine]

I've decided it is probably too risky for me this particular property unless it went for a very low price (not likely I imagine!) but I might watch the auction just to see how it goes and how it all works and for the experience. The issue with such a project seems to be no one can tell you how much it is likely to cost to do until you actually start full on planning to do it. Obviously it is easier for people with experience in doing that but as a newbie there are just too many unknowns for me.

My Ak property is going to auction the day before so now I am busying figuring out what reserve to set. I think the agents are softening me up to set it low but I have a pretty good idea of what I want and what I think is reasonable. It's interesting to look at their fees. 100k difference in the sale price is massive to me of course but only $2300 difference in fees to them. I figure they'll want the sale rather than trying to get best price!

Thanks all those who commented here. It's been an interesting experience!

Simon

[Beano]

Hi all, I recently moved from Auckland to Wellington for a career/lifestyle change. I am currently selling my house in Ak and looking to buy in Wellington. One of my hobbies is restoring old cars which means I need quite a bit of garage/workshop space. Something not easy to find in Wellington!

I missed out on one perfect residential property that sold by tender. I am currently looking for others. But one thing that did come up was a small (200sqm) commercial property that used to be a garage or panel beaters I think. It is basically a giant shed type building. Concrete block walls and steel beam roof. It has on the front of it two small offices as a second story (only 40 sqm). There is also on the main floor a toilet and sink and kitchen type sink/break room.

As a large garage the property is ideal for me and I am looking into the possibility of converting it into a small, one bedroom apartment for myself with a huge amount of garage/workshop space. Basically my own little apartment with a big garage space in the city. It would be for my own use, not to rent out.

The property is being sold by auction.

I have no experience with commercial properties at all nor of doing this kind of conversion and was wondering if there were any pitfalls I should watch out for. I know that the zoning is fine for converting it. What I don't know is what strengthening or changes need to be done if I do make an apartment there. I asked the council and the response is basically they need to see what my plans would be before they can advise (I do have several designers lined up if I get that far). I don't quite understand how the new earthquake ratings come into it all. Being a 2 story building but only one dwelling maybe they don't?

I also am unsure about having it changed from a commercial property to a residential one. Currently it is rated as a commercial property. Can that be changed? Is is worth changing it? I am guessing the rates (currently about 10k) would be less!

Also I know there might be tax implications involved too. I am GST registered as is the vendor so the actual purchase if it happened would be zero rated for GST I believe. But I don't understand the longer term implications.

You do hear of people now buying inner city properties and converting them. Does anyone have any experience of this? Or know of good places to get information on what is involved? The thing I am finding tricky is working all this out before I even decide if I will be able to bid on the property. What's an appropriate amount of due diligence? Any advice (even if it's don't do it!) I would be grateful.

Thank you!

Simon

Did you buy ?