Converting residential property into commercial property involves several key steps, including applying for change of use planning permission. This process ensures that the building is suitable for business purposes and that any alterations to the property are approved and legally compliant.
This article will guide you through some of the necessary procedures to secure permission, comply with building regulations, and prepare your space for its new commercial function.
Considerations when converting residential property into commercial property
Planning permission
To initiate the transformation of a residential property into a commercial space, acquiring planning permission is a pivotal step. Here’s what is needed during the application process:
- An application form, which is typically completed online.
- Detailed location plans and site drawings that illustrate the property’s layout.
- An ownership certificate to verify that you hold the title to the property.
- A design and access statement usually prepared by an architect or a planning consultant, particularly when significant changes to the property’s exterior are proposed or if the property is listed.
- A fire safety statement for buildings exceeding 18 meters in height or those with more than seven storeys.
- An application fee, which varies based on the details of the project.
Commercial property use classes
The Town and Country Planning Order 1987 outlines the use classes and what activities can take place on a property. Whether you’re opening a retail shop, an office, or an industrial workshop, each falls under a distinct use class. It’s important to apply under the correct category to ensure your project aligns with local planning policies.
As of September 1st 2023, changes were made to the order that affected property in England with the intended aim of simplifying the change of use of certain type of commercial premises. These changes do not apply to property in Wales. The Use Classes should be checked carefully.
Contact your local planning authority early on to seek pre-application advice and pre-empt any issues. Failure to obtain the necessary planning permission can lead to hefty fines and potential legal proceedings.
Building regulations and suitability
In converting a residential property for commercial use, compliance with legal standards for architectural design, construction, and modifications is critical. This includes evaluating the property’s suitability for business needs, such as the addition of rooms like kitchens and washroom facilities, and ensuring accessible fire exits are on every floor.
Commercial settings demand stricter health and safety regulations, including clearly marked fire exits, escape routes, Portable Appliance Testing (PAT) for electrical devices and identifying and managing asbestos.
Additionally, a thorough property survey is essential to assess the practicality and structural integrity of the proposed layout, including ventilation, drainage, sanitation, and accessibility standards. Furthermore, plumbing and electrical systems may require extensive reviews or overhauls.
Leasehold considerations
In the case of leasehold properties, the lease should dictate the terms and conditions under which the property can be used and alterations made. When converting residential property to commercial the below should be considered:
Lease review: Review the lease to understand any restrictions or provisions related to the change of use and for alterations. Some leases may have explicit clauses preventing commercial use or certain types of businesses, as well as restricting the type and extent of alterations that are permitted.
Landlord consent: If the lease requires it, or if there are any ambiguities, obtaining written consent from the landlord or management company is essential. This consent should specifically address the change of use and any related alterations to the property.
Negotiating terms: If the current lease doesn’t allow for a change of use, or if there are restrictions, tenants may need to negotiate new terms. This might involve renegotiating the rent, as commercial leases often have different pricing structures compared to residential leases.
Impact on lease obligations: Changing the use of the property may impact other lease obligations, such as maintenance, repairs, and insurance. These should be clearly understood and agreed upon to avoid future disputes.
Buying, selling or leasing property where change of use is required
Occasionally you may want to sell or buy a property where change of use is needed or, take a lease of premises where change of use (and associated works) is needed. This can be done by using a conditional contract or, an agreement for lease in the case of a new lease.
The contract can commit the parties to a deal and specify that one of them will obtain the change of use consent and carry out the relevant works and that completion of the works will trigger completion of the sale and purchase or lease.
Such contracts can provide certainty and an agreed framework. They can commit the parties to the deal and make clear who is obliged to do what and when and what will happen if the change of use and any works conditions are satisfied and, what will happen if they are not.
Contact an experienced commercial property lawyer if you need advice on your lease or for buying or selling property where change of use is needed.
Get legal advice with Rubric
For those looking to convert a residential property to commercial, it is crucial to consult with an experienced property lawyer to ensure that all aspects of the conversion are handled with expertise.
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