The honest answer is: it depends. But "it depends" is not helpful on its own — so this guide breaks down each cost category, gives you real-world ranges for 2026, and walks through a worked example so you can start to understand the numbers before you commit to a deal.
Costs for a commercial-to-residential conversion fall into four main buckets: planning and professional fees, build costs, finance costs, and holding and transaction costs. Let us go through each one.
Planning and Professional Fees
These are the costs you incur before a brick is laid. For a Class MA permitted development project they are significantly lower than for a full planning route.
| Item | Typical Cost | Notes |
|---|---|---|
| PD eligibility assessment | £195 | Desktop check before you commit. Confirms whether the route is available. |
| Planning drawings | £800 – £2,500 | Existing and proposed floor plans, elevations. Varies by building size and complexity. |
| Planning statement | Included with PWA service | Written supporting document submitted with the application. |
| Prior approval application fee | £120 per dwelling | Government fee, paid to the local planning authority. 5 flats = £600. |
| Structural engineer | £1,000 – £3,500 | Required if structural alterations are planned or if the building is older. |
| Building regulations (plan check) | £500 – £2,000+ | Depends on local authority or approved inspector. Usually scaled to project value. |
| Party wall surveyor | £700 – £2,000 | Only required if there are adjoining properties affected by the works. |
| Solicitor / legal fees | £1,500 – £4,000 | Conveyancing on purchase. More if leasehold or complex title. |
Because Class MA is a permitted development route, you avoid the cost of a full planning application (typically £1,500 to £5,000+) and the risk of needing an appeal (£3,000+). The planning cost for a well-prepared Class MA project is a fraction of the full planning route.
Build Costs
This is the largest variable, and the one most investors get wrong by underestimating. Build costs for commercial-to-residential conversion in 2026 depend heavily on the condition of the building, the level of finish, and the location.
As a broad guide for England in 2026:
| Specification level | Typical cost per sq ft | Typical cost per sq m |
|---|---|---|
| Shell and basic fit-out — stripped shell, new partitions, basic kitchen and bathroom, no premium finishes | £90 – £130 | £970 – £1,400 |
| Mid-range — good quality kitchen and bathroom, underfloor heating, decent flooring and joinery | £130 – £175 | £1,400 – £1,880 |
| High specification — premium finishes throughout, bespoke joinery, feature bathrooms, smart home elements | £175 – £250+ | £1,880 – £2,690+ |
These figures are for the build contract only — they do not include VAT (which may be reduced to 5% on qualifying residential conversions — take advice from your accountant), professional fees, or contingency.
Investors regularly underestimate structural, mechanical and electrical costs. A commercial building has very different M&E infrastructure from a residential one — rewiring, new heating systems, ventilation, and fire safety upgrades can add 20 to 30% to what looks like a simple conversion on paper. Always get a detailed contractor's schedule of works before exchanging, not afterwards.
What Affects Your Build Cost Most
Finance Costs
Most conversions are funded using a combination of acquisition finance (bridging or development finance) and equity. Finance costs depend on the lender, the loan-to-value, and the length of the project.
| Cost type | Typical range |
|---|---|
| Bridging / development finance interest | 0.75% – 1.25% per month |
| Arrangement fee | 1% – 2% of the loan |
| Exit / redemption fee | 0% – 1% of the loan |
| Valuation fees (lender-instructed) | £500 – £2,000+ |
| Broker fee | 0.5% – 1% of the loan |
On a 12-month project funded with £400,000 of development finance at 1% per month, the interest alone is £48,000 before fees. Finance costs are real and significant — factor them into your appraisal from day one.
Other Costs to Budget For
| Item | Typical cost |
|---|---|
| Stamp Duty Land Tax (SDLT) | Varies — seek advice |
| Insurance (buildings, public liability during build) | £1,500 – £5,000/year |
| Empty rates (while building is vacant) | Varies by rateable value |
| Project management / site supervision | 5% – 15% of build cost |
| Contingency | 10% – 15% of build cost |
| Sales / letting agent fees (on exit) | 1% – 2% of GDV |
Contingency is not optional. Every conversion project finds something unexpected behind the walls, under the floor, or in the structure. Budget 10% minimum; 15% is more honest.
Worked Example: 4-Flat High Street Conversion
To bring the numbers to life, here is a simplified appraisal for a typical mid-sized Class MA conversion project in the Midlands in 2026.
On these numbers, the deal only works if GDV is higher, build costs come in lower, or the purchase price is negotiated down. This is exactly why Andrew always stress-tests the appraisal before a client commits — a small movement in any variable makes a significant difference to viability. The buildings that work are those bought at the right price with a clear-eyed view of costs.
How to Improve the Numbers
Buy at the right price. This is the single biggest lever. Overpaying on acquisition is the most common reason conversions fail. Know your maximum allowable offer before you view, not after.
Get a contractor's schedule of works before exchanging. A builder's estimate before you have exchanged gives you the ability to renegotiate or walk away. After exchange you have no leverage.
Use VAT recovery where available. Conversions of commercial to residential can qualify for the 5% reduced VAT rate on building work. This meaningfully reduces the effective build cost — take advice from a VAT specialist.
Consider embedded capital allowances on commercial purchase. If you are buying a commercial building, a capital allowances survey before completion can identify significant tax relief on existing fixtures and fittings. On a £280,000 purchase, embedded allowances of £40,000 to £80,000 are not unusual.
Factor in rental yield, not just sale GDV. In some markets, holding the flats as a rental portfolio outperforms a single sale — particularly where residential demand is high and commercial yields are compressing. Run both appraisals.
Want Help Running the Numbers?
Before you make an offer on a commercial building, it is worth sense-checking the appraisal with someone who has done this before. Andrew works with investors at every stage — from initial feasibility through to prior approval granted and project managed.
Talk to Andrew
Andrew has worked on commercial conversions from sub-£100k acquisitions to multi-million pound office blocks. His background as a CIMA Chartered Accountant means the numbers get the same attention as the planning.
Cost figures in this article are indicative only, based on typical 2026 market rates in England. Actual costs will vary significantly by project, location, building condition, and specification. Always obtain detailed contractor quotes and professional advice before committing to a project. This article does not constitute financial or tax advice.