Fancy coming back to my garage?

With city prices soaring, the car space could become a living space, reports Chris Partridge

On the face of it, there are only two things you can do with a garage. You can keep junk in it, or keep a car in it. Converting it into a stylish but tiny flat is not usually seen as an option.

On the face of it, there are only two things you can do with a garage. You can keep junk in it, or keep a car in it. Converting it into a stylish but tiny flat is not usually seen as an option.

But that is exactly what is being proposed for a freehold garage in Southwark that comes up for auction next week. Currently, the property is a hole in the front of a Victorian house off the Old Kent Road, sealed at the front by a metal roller door, but it comes with planning permission to convert it into a bijou, one-bedroom apartment.

Happily, the garage is deeper than normal, so there is room for a separate bedroom and shower room, says auctioneer John Weatherall, of Andrews & Robertson. But despite the diminutive size, this is not a project for a DIY-er.

"Almost certainly a local builder will buy it and do the conversion," he says. "It will make a nice pied-à-terre for someone working in the City." The guide price for the garage is £55,000, and at that price a builder could make a decent return on the investment, he adds.

Calculating the return on converting a garage into a flat is complicated by the fact that parking spaces in central London are now incredibly valuable, especially in the congestion zone. When does a garage become more valuable as a flat?

Sometimes the answer becomes clear when someone realises the full potential of a garage. Martin Bikhit, of Kay & Co (020 7486 6338), sold a garage in Thornton Place, Marylebone, with space for four cars for £1m recently. "The guy who developed it dug down into the basement to extend the area from 2,500 sq ft to 4,300 sq ft," Bikhit says. "It became a stunning home and it still had space to park two cars."

The house was recently sold for about £3m, which must represent a sizable profit despite the high cost of excavation.

Bikhit currently has a four-car garage in Salisbury Place, also Marylebone, with planning permission for conversion into a studio flat. "However you look at it, garages are a fantastic investment," he says. "Garage spaces can be let out for about £5,000 a year, alternatively, when converted, the flat could be worth £350,000." In this particular case, the garage has a parking space outside as well, so anyone who buys the flat will still have a slot for the motor.

Buying a garage without planning permission can be a risk, however, as parking is a political issue. "At one point, Westminster council was totally against the loss of parking spaces but that seems to have receded," Bikhit says.

It is also wise to consider carefully if conversion will result in a property that will sell, and this is largely a matter of location, as Andrew Gilbert, of Winkworth's Ealing branch (020 8896 0123), points out. "A year ago, I sold a parking space in Burlington Mews, in Acton, which had been bought by an architect who got planning permission for a tiny, one-bedroom cottage on it," he says.

Cunning use of a mezzanine sleeping gallery over an open-plan living room/galley kitchen, with a wet room, shower and loo, enabled the designer to sardine everything you need for a minimalist lifestyle into the site - a mere 195 sq ft. It could be extremely stylish, but the economics of the conversion begin to look a bit suspect when you consider the Acton property market.

The obvious buyer would be a banker or someone needing a pied-à-terre. But Acton is not exactly convenient for the City, let alone Canary Wharf. The nearest station is Acton Central (five minutes away), which has a 10-minute service to Paddington.

"Most pied-à-terres are situated in central London," Gilbert concedes. So, you are looking at selling the place in the regular market for studio flats, and 195 sq ft is small, even for the first-time buyers.

Studio flat prices in Acton range from £130,000 to £170,000, although The Old Parking Space might get more because of its great rarity as one of the smallest detached houses in London and for its funky architecture. And it is freehold rather than leasehold.

The site was sold for something approaching £100,000, so making a profit will be difficult. This may explain why construction has yet to start, despite the sale having been completed about a year ago.

And there is one other problem when considering buying a garage and converting it into a flat. Once the work is done, where do you put the car?

Andrews & Robertson's sale takes place at the New Connaught Rooms, WC2, on June 8 - catalogues available on 020 7703 2662.