My dad would not assume I should purchase a flat above a funeral enterprise – is he proper?

I’m a first-time buyer. Most of the properties in my price range near where I live are above shops or businesses. They are a lot cheaper than flats in normal blocks. 

My dad has told me buying a flat above a shop isn’t a good idea, yet I can’t afford anything else.

The flat I like is above a funeral business and would be quiet. What do I need to consider before taking the plunge?

I want to live near where my family home is. If I don’t go for a flat above a shop, I know I’d have to move much further away. Any advice?

Jane Denton, of This is Money, replies:  Buying a flat above a business can be a way for buyers on a budget to get their first-step on the ladder. However, you would need to enter the purchase with your eyes wide open. 

Some lenders are reluctant to offer mortgages on properties above business premises. Lenders view premises above businesses as higher risk and your pool of prospective lenders will be smaller than if you were going for a typical flat in a purpose-built block. 

You would also need to scrutinise any service charges carefully, as these could be higher for commercial premises. You would need to know how the service charge would be divided between you and the funeral business. 

In some cases, insurance cover for homes above businesses can be higher than normal, particularly if the business is deemed a fire risk. This seems less likely for a funeral business, though would be a concern if you were looking at a flat above a takeaway food business or restaurant. 

You and your solicitor need to look over the lease on the flat very carefully before taking the plunge. 

I’d also want to see the lease of the funeral business, which should cover issues like what sort of business can be run at the shop. You may be fine with living above a funeral firm today, but wouldn’t want to find yourself living above a fried chicken shop at a later date. 

Also consider how easily you would be able to sell the flat if you choose to move on. If you browse online property portals you can see that a fair few flats above shops end up being reduced in price, because fewer buyers are interested in them.

Nicholas Mendes, mortgage technical manager at John Charcol, says: Buying a flat above a business can be a realistic and sensible way to stay close to home when prices elsewhere have drifted out of reach. 

They do, however, come with extra considerations that do not apply to standard residential blocks, and understanding those early will save you stress later.

The first is mortgageability. Many lenders are cautious with flats above commercial premises because they worry about resale demand, noise, smells, or future changes of use. 

Some will lend only at lower loan-to-value ratios – meaning the buyer needs to put down a large deposit. Others will not lend at all if the business below is a takeaway, pub, dry cleaner or anything generating heat and odour with potentially late opening hours. 

A funeral business is likely to be viewed more favourably because it is quiet and low-footfall, but you still need to check lender appetite. A broker can quickly tell you which lenders are comfortable and what deposit you’ll need.

Next is resale. These properties attract a smaller pool of buyers, which is why they are cheaper in the first place. 

That doesn’t mean they are impossible to sell, but you should assume your future buyer will be just as price sensitive as you are now. 

Look at how long similar flats in the immediate area take to sell and whether prices hold steady. If properties above shops locally change hands without hanging around, that is reassuring.

Lease and building management are crucial too. Mixed-use buildings often have more complicated service charges and repair obligations because commercial units can cause more wear to the building fabric. 

Your solicitor should dig into who pays for what, how the building is insured, and whether the commercial tenant has rights that affect noise, deliveries or refuse storage. Do not skip this step.

The day-to-day practicalities also matter. Visit at different times of day. Check smells, loading bay activity, evening footfall, and deliveries. Even a quiet business can be busier than you expect at 7am or 10pm. Think about how you feel walking home at night and whether you are comfortable with the shopfront attracting attention.

Finally, balance all of this against your priorities. If staying near family is non-negotiable and the flat is mortgageable, well-managed and realistically priced, it can be a perfectly sound choice. The key is going in with clear eyes. 

A flat above a business is not inherently a bad purchase, but it requires more careful homework than a standard block and if the fundamentals stack up, it can be a very practical way onto the ladder.

Liam Monaghan, managing director of buying agent LCP Private Office, says: While buying a home above or next to a business can be fine, there are some important issues to consider that do not arise with a standard residential purchase. 

It may be more difficult to obtain a mortgage, as lenders classify flats above shops and commercial premises as non-standard. 

Insurance can also be more expensive, for example if there is greater fire or security risks, or if the commercial unit is associated with late night activity.

The good news is that purchasing a flat above a funeral business is usually less problematic than a property above a takeaway, pub or salon. 

They are generally easier to get a mortgage on thanks to not being noisy or odorous businesses with less foot traffic than food or leisure premises. 

However, there are still some specific things you should consider before buying.

Some lenders will still classify it as ‘above commercial premises’ and therefore require extra checks, and some may worry about public sensitivity and reduced resale appeal. It is therefore advisable to ask your broker which lenders will accept flats above low-impact commercial premises.

While funeral businesses are usually quiet, it would also be advisable to gauge activity in terms of vehicle movements before making any decisions, such as hearses or limousines early in the morning, parking issues or out-of-hours deliveries. 

It might be helpful to speak with neighbouring residents to get a realistic sense of day-to-day activity and any practical issues that might not be immediately apparent during viewings. 

You should also ask your surveyor and solicitor to check compliance with business health and safety and ventilation regulations, to ensure you wouldn’t be affected by noisy ventilation or extraction systems. 

Your solicitor will also be able to advise on any potential issues with the lease, such as rights of access through residential areas, any clauses about noise or permitted use and the burden of responsibility for structural repairs.

Ultimately, purchasing a flat above a funeral business could be a good-value purchase, as long as you are comfortable with the nature of the business and its operation. 

While you would generally expect it to be quiet and low-impact, you should seek professional advice regarding the mortgageability, noise and ventilation, lease terms and resale potential before committing to a purchase.