Studio converts wheel away the trappings of work

Planning authorities reluctant to allow the residential redevelopment of obsolete industrial blocks are compromising. They are letting developers create mixed-use properties that retain a proportion of commercial space. This live/work combination, although available on a small scale for several years, is increasing in popularity by leaps and bounds as people return to urban living.

Robin Gevell, of London Buildings, a developer that has recently entered this area, says: "The concept of living and working in the same place has a lot to recommend it. But often in central London the reality is inhibited by lack of space."

Warehouse conversions provide a shell which can be divided up to ensure maximum use of space, and generally appeal to artists, photographers and graphic designers - anyone who needs studio space and who is also likely to have employees and visitors, such as models, dispatch riders and assistants, coming and going.

Local authorities do not usually restrict employment that is appropriate for these premises. The disturbance to residents it creates will be countered by the fact that other apartments in the block are also classified as live/work properties. The main conditions are that the residential space cannot be occupied independently of the work space, or vice versa, and allocated areas must be given over to business use.

The ratio of working space to living accommodation varies depending on the local authority. In Hackney, for example, many properties are live/work without a specified ratio.

Hackney authorities pursue progressive planning policies in their bid to regenerate the area. Keen to maintain the potential for local employment, but unwilling to see buildings standing empty, they have decided to issue mixed-use consents to encourage people to live and work in the community.

The idea is still in its infancy, despite local estate agents declaring there is not enough property available. Melvin Davies, an accountant with Sharles and Partners in Rivington Street, has seen a significant increase in live/work usage locally, although he maintains there is still a lot of open loft space available of between 500 and 1,200 square feet.

Theo Bergstrom and Tessa Musgrove, both still life photographers, have lived in their loft studio in Shoreditch for six years. Their former home was a small flat in Soho above their respective studios, an arrangement that worked reasonably well, but the advantage of their present home is that it is designated 50/50 live/work but without specific areas allocated for each. Thus almost everything is on wheels and the 2,000 square feet is uncommitted space, providing useful flexibility for both work - with space to build room sets, for example - and play, when photographic equipment can be wheeled away. A mezzanine floor houses the bedroom and the bathroom, which is open to the skies.

"I have very positive feelings about this way of living and would thoroughly recommend it to anyone," says Mr Bergstrom. No early-morning crush on the tube, and no extra overheads.

Are there any tax complications? A sole residence is free from capital gains tax but a business premises is not, so sale profits will be liable to capital gains tax according to the percentage of business use. Residents who are trading up to larger properties may be eligible for roll-over relief. This applies if profits are reinvested in a similar property.

One issue that remains unclear is whether such properties are liable for council tax, business rates, or both. Properties currently available in Hackney and Southwark are generally classed as residential, so only council taxes apply. Three developments in Battersea offered by Sapcote Lofts have unrestricted live/work use and are valued individually by what is seen on site.

What type of mortgage would be available? Tim McCudden-Hughes, an independent financial advisor, says his experience of obtaining mortgages for clients has been primarily through the clearing banks.

There have been concerns from building societies over their ability to sell a property in the event of repossession because, they fear, the stipulation that commercial activity must take place on the property narrows the field of potential purchasers. But the Nationwide stresses that it looks at each property individually and, as long as a minimum of 40 per cent is for residential use, a residential mortgage would apply. Interest rates are standard owner-occupier rates, with no loading.

Stirling Ackroyd has a live/work loft-style home in Bevenden Street, Shoreditch, that comprises two floors, with one bedroom and three large reception areas, plus a garage. The property has 50-50 live/work use with work confined to the ground floor. The 2,210 square foot property is priced at pounds 265,000 freehold.

Zone Alaska is a new development of live/work space by London Buildings. The local authority, Southwark, has agreed to a live/work ratio of 75 per cent to 25 per cent and properties are classified as residential apartments, thus they are only liable for council tax. Eighteen shell loft apartments, of between 800 and 2,300 square feet, are priced at between pounds 100,000 and pounds 225,000 and are available through Alan Selby & Partners (Tel: 0171-613 3055).