Converting a commercial property to residential one may seem attractive, especially in the case when you are doing it for the first time. And moreover, this process has proved out to be a popular property investment process for the investors.
In fact, it is stated by the estate agents that around 40% of the increase in residential property has been made in the year 2007.
You can easily convert the commercial property to a residential one but you need to have planning permission. Sometimes it may land you in the legal and financial long processes. But in some cases, the commercial property already has planning permission which can save a lot of your time.
So basically the question here arises is that what is the main process of converting the commercial sector into the residential one.
The first thing to consider is how are commercial to residential sector funded?
Well, according to us it is most prudent to go heavy on your pockets, as conversions of this kind may sometimes lead to issues. And, it is the main factor to be discussed, as a lot of changes have been witnessed in the last three years by the amendment in the statutory planning.
Before the implementation of statutory planning, it was directly funded by the short term development finance on the vacant commercial properties. Hence, post-GPDO 2015, most developers are choosing over a hybrid of traditional commercial finance and development finance all cloaked together as a single package.
So, what are the resale outturn of commercial to residential property?
The vitality of taking a commercial to residential conversion by an officer is governed by various factors to find out whether it is a frugal job to take or not. To take up the project one must have in-depth knowledge of the locality and the state of the local buy market to make a primed verdict.
It is a sure fact that designing a commercial property for multiple occupancies provide much high revenue but a proper procedure must be followed to add it to the numbers.
Does a converting a commercial sector to a residential one require planning permission and how long does it take?
As specified in the current specific laws planning permission is not really required. But it doesn’t imply on the local authorities that focused on the protection of the commercial space. So, it is always helpful to check out all the facts of your property with your planning consultant before getting into the process.
Furthermore, most of the agricultural properties don’t require planning permission for converting it into the residential one but the contamination of the must be done to ensure the appropriateness for the development.
The processing time of converting a commercial to residential doesn’t take much time if your property is passed out the planning commission factors. So it all depends on the planning commission, all you are required to do is to follow the rules and regulations of the conversion process carefully.
It is also seen that converting of commercial to residential seems like a good investment opportunity to people because it is easy to buy a vacant commercial sector on lower rates which may give you higher ROI in the future. Moreover, the commercial market is quite saturated from a longer period of time which results in the lower values of the commercial sector than the residential one.
On the overall, we just want to help you out with the right procedure of converting a commercial sector into a residential one especially to the ones who are making their grand plans. Sometimes it may sound you mongering but it would be very insightful advice for the people who are in the middle of it but are not able to proceed it due to the lack of right guidance.
Are you planning for converting your commercial property to residential?
Well, we all know that to rent out a property like this has its numerous advantages, but always remember to go through every detail before you execute it.
As we all are aware of the fact that converting a commercial property can possess you with some difficult logistical verdict. When you start planning and scheming about the new area, there are certain things we should always keep in mind such as health, safety, security, and many more things.
Well, the question is how to change the use of commercial to residential.
It is not as easy it looks but had a great ROI for developers. In simpler terms, commercial property is usually an office or workshop building and you are planning to convert it in a block of flats, HMO or any house. One of the greatest advantages of converting a commercial sector to residential is that commercial property has generally lower value than that of residential property. And all this is due to the engorgement in the commercial property sector or market.
Another advantage of remodeling commercial property to residential is that they are mostly lower in price due to left vacant for a longer period of time. As a result of which the owner is going to sell the property soon and at reasonable rates, just to deracinate their current maintenance expenses.
Pros of converting the commercial property to Residential property:
The shops who are already permitted under the Development right are not required to get the planning permission.
In case, you require planning permission it is easy to get as the National Planning Policy Framework grant it easily to the property that is vacant for a longer period of time.
You are getting the bigger property at reasonable rates.
You will not be required to pay high stamp duty as the non-residential properties are liberated from it.
You will not be required to pay Vat when you make your commercial property go into some construction work to convert it into the residential one.
Cons Of Converting a Commercial Property to Residential One:
You will be required to pay some fees in case of applying for planning permission.
You will be required to take a professional survey of the commercial building which again makes you spend money.
Sometimes it may become money pits for you if not managed properly.
Once the planning permission is done you will be required to hire a development financer for the project which can turn out to be a bit costly for you.
When converting a commercial property to residential one you are required to meet some requirements as a landlord:
The journey of the landlord, in this case, is both exciting and thrilling one. As a landlord, you have to make sure to protect your pocket in every case when meeting your requirements such as safety standards.
You need to make sure you meet all the requirements that make your commercial conversion endurable. Take a look at the requirements specified below and make sure that they are met before the tenants move into your property:
Fire Safety
Plumbing
Healthy environment
Electricity safety
Safety Regulations
Consequently, we can say that converting a commercial property to residential one can be seen difficult at first but it will work out smoothly once you get into the procedure. All you have to do is just go according to the rules and the regulations and soon you will be able to transfer your property into a residential area.
Commercialisation of a piece of property is a beguilingly viable way of increasing your ROI on a project you have built or invested in. There is no arguing that there is a saturation of commercial spaces right now and penetrating the market might take some work. But the longevity of these properties, especially if well positioned, cannot be argued either. If the conversion of your property to commercial use appeals to you and the journey to a much greater profit is all but written, here are some considerations that you should ruminate on.
Suitability
Town and city centers are very attractive for conversions of residential to commercial properties because of the sheer traffic flow that they experience. They satisfy the first rule of real estate that is to get the location right. Getting the locality of the project takes precedence, as it ticks out such important variables as the right penetration of amenities, good transport linkages, security and access. It is important that parking is in abundance, as are the traffic routes that feed into and out of the development, in appropriate scale. The change of use has to be heralded by a study of some sort to show what kind of commercial property- restaurant, shops, businesses or hotel- might be most profitable.
If all these check out, it is essential that you get community approval. Ensuring that there is minimal disruption to normal life and that provisions of the local amenities will not be affected. Also, not adding to the noise pollution will set you on the right path to winning over your neighbours.
Approval
Your entire vision will be lost if the government is not going to back you up. You need to present a detailed application to the Local Planning Authority. Depending on the size or class of your property, you may or may not need planning permission, but it does not hurt to check. If a lot of reconstruction work is involved, you definitely need planning permission and the application fees for this depend on the scale of the project. Familiarise yourself with the building regulations for the kind of conversion that you are envisioning, and the need for any licenses.
Costs
The costs of repurposing your property are not always in black and white. In addition to any façade and branding changes that you may make, you have to consider partitions, increments or decrements to the amenities, fire safety improvements, extensions and security enhancements. Add labor to the equation and the cost of the project can escalate from manageable to needing financing. This underscores the need for consulting services. Between planning submissions and policies to designing and planning for the new property, experienced help goes a long way, and not just in preventing avoidable losses in branding, material and labor costs.
Security
While it has been mentioned before, it is important to underscore the importance of a security upgrade. Unlike residential properties, commercials ones are more often than not unoccupied in the night. An upgrade in security, either through a security company offering guards, remote surveillance or both, will be needed, more so if there is valuable stock that is stored within the premises. An insurance policy might also be worth considering for covering for such eventualities, as theft or damage.
Converting a property for commercial use does not give instant gratification, but it does pay off in the long term. There are many hurdles to jump, more so than when the conversion is from commercial to residential, but when done right, the profits are worth the trouble. Given the scale of such an undertaking, it is wise to seek that extra counsel in the form of an architectural company with a proven track record of conversions to commercial properties.
Because of the growing demand for residential properties for rental, many commercial premises are being converted to flats (so much so that for businesses seeking to move, office premises have become a little sparse). Therefore, some of our enquiries request help submitting a change of use planning application form for a change of use from B1 to C3. If the unit is for retail, we apply for A1 to C3 (or to Mixed Use: A1 and C3, if it is to retain the shop unit and convert to residential on the floors above). In some cases, the planning officers request an Economic Statement to explain how the application will impact the local economy, and this helps them to decide the case.
We create architectural drawings for a fantastic layout design in your new flat(s), and we offer to submit the application on your behalf. Our designers then liaise with the planning officers during the process, with no extra charge from us. [We can also support you later at the pre-construction stage with Building Regulations Drawings, and at the build stage with Tender Packs and Contract Administration for your refit or conversion to residential use.]
Property Developers
Whether you are a ‘newbie’ or a seasoned developer, we can work together. For new developers, we can support their wish list with our informative and helpful services. For experienced developers, we can provide efficient services to free up much of their time to think of your next project and give you a better work/life balance. We also like to network with developers regarding new plots, which are very much sought-after in the capital. Therefore developers can always consider themselves invited to our offices for coffee and a presentation of flagship projects.
Our designers can come up with bold, contemporary and tasteful schemes for you, or traditional styles which are sympathetic to the surroundings. Our planning consultants will recommend the best route to optimise your chances of approval. That could be the pre-app. route (this used to be called outline planning). Your proposal would most likely require a Design & Access Statement too, which we can commission externally. New builds will need to demonstrate via 3D animated renders the aesthetics and blending of the design. This can be done with our Immersive Design Package. Later we can provide your Building Regulations Drawings to satisfy Building Control, and for the construction phase, we recommend Tender Packs and Contract Administration to put you in the driving seat with the builders.
We have recently provided branding and fit-out services for several restaurants. Do see some of our studies. Again, we can support you with all stages from your planning application for the new shop front or restaurant façade to our interior design service and the refit. Moreover, our graphics team can provide branding and corporate identity products to beautifully suit the new space we have created.
At EA we look at 7 aspects for each commercial application:
social demographics adjacent to the proposed site
the likely effect on economic factors the change of use will have
how the change of use will benefit the inhabitants of the immediate area.
whether traffic will be affected
how it will affect the surrounding infrastructure
whether parking spaces will be adequate or impacted
Shops, retail warehouses, hairdressers, undertakers, travel & ticket agencies, post offices, pet shops, sandwich bars, showrooms, domestic hire shops, dry cleaners, funeral directors, internet cafes
A2
Financial & professional services e.g. banks & building societies, professional services e.g. estate & employment agencies
A3
Restaurants, cafés for the consumption of food on the premises, snack bars
A4
Drinking establishments e.g pubs, wine bars (not night clubs) including drinking establishments selling hot food
A5
Hot food takeaways – For the sale of hot food for consumption off the premises
B1
Business Offices (other than A2), research & development units, light industry appropriate for residential areas
B1 Vacant property
If the premises were vacant before 30.05.13, its last use has to have been office use.
B2
General industrial – industrial processes other than B1 (excluding incineration, chemical treatment, landfill, hazardous waste)
B3 to B7
Special industrial
B8
Storage or distribution including open-air storage
C1
Hotels, hostels, boarding houses, guest houses
C2
Residential institutions, care homes, hospitals, nursing homes, boarding schools, residential colleges, training centres
C2A
Secure Residential Institutions e.g. prisons, young offenders institutions, detention centres, secure training centres, custody centres, short term holding centres, secure hospitals, secure local authority accommodation, military barracks
C3 (a-c)
Residential dwellings:
(a) a single person, family, a couple (married or unmarried), a relative of a family with the family, domestic employees like au pair, nanny, nurse, governess, servant, chauffeur, gardener, secretary / PA; a patient & carer; a foster parent & foster child.(b): up to 6 people living as a single household and receiving care e.g. hostels for people with learning disabilities or mental health issues.(c) up to 6 people living together as a single household. This does not fall under C4 HMO. It could be a small religious community or a homeowner who has a lodger.
C4
Houses in multiple occupations, i.e. shared houses occupied by 3 and 6 unrelated individuals, who share a kitchen and bathroom.
D1
Non-residential institutions, e.g. Clinics, health centres, crèches, day nurseries, day centres, schools, art galleries, museums, libraries, halls, places of worship, church halls, law courts. Non-residential education and training centres.
D2
Assembly and leisure, e.g. Cinemas, music and concert halls, bingo and dance halls (not night clubs), swimming pools, ice rinks, gyms or outdoor recreational sports arenas/tracks (except motorsports, or firearms)
Sui generis
Buildings that do not fall within any use class, e.g. betting offices/shops, payday loan shops, theatres, larger HMOs, hostels with not providing care, scrap yards, petrol filling stations or car. Retail warehouse clubs, nightclubs, launderettes, minicabs, amusement centres, casinos, buildings used for agricultural purposes
Mixed use
E.g. Retail & residential, or retail & office
B1 Vacant property
If the premises were vacant before 30.05.13, its last use has to have been office use.
Further information
Material changes of use
These include any change of use whose proposed use is residential or part-residential, e.g. converting commercial properties into homes such as an office above a shop which is to be developed as a flat. This is a conversion of commercial property to residential, or part-residential.
Other examples for material change of use:
house to a flat conversion
flats to house conversion
convert shop to residential
If you would like further information on material change of use case law, see link.
If you wish to apply for a change of use of a premises, you may need planning permission from your Local Planning Authority. However, permission will not be needed if your existing and intended use fall within the same class or range of classes, see class list below. Also, certain changes of use are permitted without applying for permission, as also shown in brief in the second table below.
Nurseries providing childcare (subject to prior approval of certain aspects)
Buildings used for agricultural purposes
State funded school or nursery providing childcare (subject to prior approval of certain aspects)
Please note the above list is intended as a guide. You can find more exhaustive information on the Planning Portal, or you can contact us to check if your proposed change of use falls under Permitted Development.
Planning permission may also not be required if under The Town and Country Planning Order 2015 (GPDO) a change of use is allowed to another ‘use class’. As an example, a shoe shop can be changed to a greengrocer’s shop without a planning permission because both uses are in the same ‘use class’. The GPDO also permits the change of a restaurant to a shop without the need for planning permission.
A change of use may not require permission in the above-mentioned cases. However, any kind of external building work related to a change of use may actually require permission.
In addition to the above complex list of changes, do take note that Local Planning Authorities can remove Permitted Development rights under Article 4 if they wish to conserve aspects of the area surrounding your proposal. In those cases, you would be advised to make a full planning application for a change of use.
The reason we now have Permitted Development was to facilitate developing unused buildings, sustaining and regenerating brownfields and partly addressing the shortage of housing stock. PD in changes of use was intended to ease the process for business owners to meet local customer demand, e.g. changing use from A1 to A3, retail to restaurant.
Betting and loan shops are excluded from the retail class to give LPAs more control in allowing these to start up in their districts of governance.
See link: DCLG for more information about effective local government and planning.
What is a material change of use? These include any change of use whose proposed use is residential or part-residential, e.g. converting commercial properties into homes such as an office above a shop which is to be developed as a flat. This is a conversion of a commercial property to residential, or part-residential.
Other examples:
house to a flat conversion
flats to house conversion
convert shop to residential (less likely on the High Street, but more feasible from a corner shop)
You may wish to consult the material change-of-use case law if you are interested in residential changes of use.
At Commercial Architecture we look at 7 aspects:
social demographics adjacent to the proposed site
the likely effect on economic factors the change of use will have
how the change of use will benefit for the inhabitants of the immediate area.
whether traffic will be affected
how it will affect the surrounding area
whether parking spaces will be adequate or impacted
Changes of use such as converting an office to residential use.
Because of the growing demand for residential properties for rental, many commercial premises are being converted to flats (so much so that for businesses seeking to move, office premises have become a little sparse). Therefore, some of our enquiries request help submitting a change of use planning application form for a change of use from B1 to C3. If the unit is for retail, we apply for A1 to C3 (or to Mixed Use: A1 and C3, if it is to retain the shop unit and convert to residential on the floors above). In some cases, the planning officers request an Economic Statement to explain how the application will impact the local economy, and this helps them to decide the case.
We create architectural drawings for a great layout design in your new flat(s), and we offer to submit the application on your behalf. Our designers then liaise with the planning officers during the process, with no extra charge from us. [We can also support you later at the pre-construction stage with Building Regulations Drawings, and at the build stage with Tender Packs and Contract Administration for your refit or conversion to residential use.]
Property Developers
Whether you are a ‘newbie’ or a seasoned developer, we can work together. For new developers, we can support their wish list with our informative and helpful services. For experienced developers, we can provide efficient services to free up much of their time to think of your next project and give you a better work/life balance. We also like to network with developers regarding new plots, which are very much sought-after in the capital. Therefore developers can always consider themselves invited to our offices for coffee, and a presentation of flagship projects.
Our designers can come up with bold, contemporary and tasteful schemes for you, or traditional styles which are sympathetic to the surroundings. Our planning consultants will recommend the best route to optimise your chances of approval. That could be the pre-planning application. route (this used to be called outline planning). Your proposal would most likely require a Design & Access Statement too, which we can commission externally. New builds will need to demonstrate via 3D animated renders the aesthetics and blending of the design. This can be done with our Immersive Design Package. Later we can provide your Building Regulations Drawings to satisfy Building Control, and for the construction phase, we recommend Tender Packs and Contract Administration to put you in the driving seat with the builders.
We have recently provided branding and fit-out services for several restaurants. Do see some of our case studies. Again, we can support you with all stages, from your planning application for the new shop front or restaurant façade to our interior design service and the refit. Moreover, our graphics team can provide branding and corporate identity products to beautifully suit the new space we have created.
At Commercial Architecture we look at 7 aspects for each commercial application:
social demographics adjacent to the proposed site
the likely effect on economic factors the change of use will have
how the change of use will benefit for the inhabitants of the immediate area.
whether traffic will be affected
how it will affect the surrounding area
whether parking spaces will be adequate or impacted
Shops, retail warehouses, hairdressers, undertakers, travel & ticket agencies, post offices, pet shops, sandwich bars, showrooms, domestic hire shops, dry cleaners, funeral directors, internet cafes
A2
Financial & professional services e.g. banks & building societies, professional services e.g. estate & employment agencies
A3
Restaurants, cafés for consumption of food on the premises, snack bars
A4
Drinking establishments e.g pubs, wine bars (not night clubs) including drinking establishments selling hot food
A5
Hot food takeaways – For the sale of hot food for consumption off the premises
B1
Business Offices (other than A2), research & development units, light industry appropriate for residential areas
B1 Vacant property
If the premises had been vacant 30.05.13, its last use has to have been office use.
B2
General industrial – industrial processes other than B1 (excluding incineration, chemical treatment, landfill, hazardous waste)
B3 to B7
Special industrial
B8
Storage or distribution including open air storage
C1
Hotels, hostels, boarding houses, guest houses
C2
Residential institutions, care homes, hospitals, nursing homes, boarding schools, residential colleges, training centres
C2A
Secure Residential Institutions e.g. prisons, young offenders institutions, detention centres, secure training centres, custody centres, short term holding centres, secure hospitals, secure local authority accommodation, military barracks
C3 (a-c)
Residential dwellings:
(a) a single person, family, a couple (married or unmarried), a relative of a family with the family, domestic employees like au pair, nanny, nurse, governess, servant, chauffeur, gardener, secretary / PA; a patient & carer; a foster parent & foster child.(b): up to 6 people living as a single household and receiving care e.g. hostels for people with learning disabilities or mental health issues.(c) up to 6 people living together as a single household. This does not fall under C4 HMO. It could be a small religious community or a homeowner who has a lodger.
C4
Houses in multiple occupation, i.e. shared houses occupied by 3 and 6 unrelated individuals, who share a kitchen and bathroom.
D1
Non-residential institutions, e.g. Clinics, health centres, crèches, day nurseries, day centres, schools, art galleries, museums, libraries, halls, places of worship, church halls, law courts. Non-residential education and training centres.
D2
Assembly and leisure, e.g. Cinemas, music and concert halls, bingo and dance halls (not night clubs), swimming pools, ice rinks, gyms or outdoor recreational sports arenas / tracks (except motor sports, or firearms)
Sui generis
Buildings that do not fall within any use class, e.g. betting offices/shops, payday loan shops, theatres, larger HMOs, hostels with not providing care, scrap yards, petrol filling stations or car. Retail warehouse clubs, nightclubs, launderettes, minicabs, amusement centres, casinos, buildings used for agricultural purposes
Mixed use
E.g. Retail & residential, or retail & office
B1 Vacant property
If the premises was vacant before 30.05.13, its last use has to have been office use.
Further information
Material changes of use
These include any change of use whose proposed use is residential or part-residential, e.g. converting commercial properties into homes such as an office above a shop which is to be developed as a flat. This is a conversion of a commercial property to residential, or part-residential.
Other examples for material change of use:
house to a flat conversion
flats to house conversion
convert shop to residential
Recent amendment regulations cover a wider range of development cases where a proposed material change of use to a building may not require planning permission. Article 10 of the Regulations [2] covers several categories of development that have been exempted.
Conversion of a commercial building under 1, 2, 3, and 6 use classes to residential use have been exempted under certain conditions. The affected use classes include the following:
· Class 1 – Shops
· Class 2 – Professional & financial services to the public
· Class 3 – Offices
· Class 6 – Guesthouses
If a building has remained vacant for a minimum of 2 years, change of use to residential use can be considered as exempted development.
If you would like further information on material change of use case law, see link.
