Converting Commercial Property to Residential and the Need for Planning Permission
February 13, 2013
Over the last few years, the economic downturn has led to the closure of many businesses, both large and small. As a result there are a high percentage of commercial properties that are stood empty, with little prospect of demand for them in the near future. This of course isn't great if you are an owner of commercial property. In order to claw back some return on their investment, many landlords are making the decision to convert their commercial property into residential homes, with the aim of either selling or renting. It is certainly an interesting option, but where do you stand when it comes to planning permission?
Easing the Transition
The fact that there are many empty residential properties is something that hasn't gone unnoticed by the Government. Indeed, at the beginning of September 2012 the Government relaxed planning permission laws surrounding commercial property, with the aim of boosting the economy. The impact being that commercial property owners are now able to convert storage or office space above shops into two flats. In the past the regulations only allowed for one flat to be created, unless planning permissions was sought.
This change was followed a few days later by the Government's announcement of plans to further relax planning permission requirements, albeit temporarily, on both residential and commercial property. The ideas included the ability for shops to be expanded by 100 metres square and industrial units by 200 metres square. In addition, offices and shops will be allowed to be extended to premises' boundary without the need for planning permission.
A 6 week consultation stage of these planned changes ran between 12th November and 24th December 2012, with it envisaged that they would be introduced before the end of the year and last until early 2015. However, at time of writing, there have been no further updates as to whether these relaxations will indeed be introduced. This has left many residential and commercial property owners in a state of limbo, as they wait for confirmation as to whether they can progress with planned building work.
The delay has also had an adverse effect on the building trade, with few wanting to push ahead with work until the situation is clarified, in the hope of reducing costs that seeking planning permissions can entail. Not ideal at this time of year; which is traditionally a quiet period for builders already.
So, where does that leave you now if you are looking to convert all of your commercial property and not just the space above a shop?
Converting a commercial property to a residential one will usually entail plenty of building work. However, before you even get to this stage, you will first need to seek approval from the local authority to change the purpose of the property. In order to receive this approval, you must be able to demonstrate that there is no demand for the property in its current state. In most instances the local authority will only consider a change of purpose where the property has been on the market for at least 6 months. Some local authorities may even stipulate a period of 12 months. If you are successful in your application for a change of use, you can then move onto the next stage of applying for planning permission for any building work that requires it.
With some commercial properties it may be that there are restrictions in place that require the consent of third parties, before certain building work can be carried out. One example of this being where the property is held under leasehold and the landlord must approve the work. It may even be that the owners of adjoining premises can exercise rights over conversion of the property. These rights could restrict your plans, or impact on how the work can be completed.
Finally, you should also take into account the fact that some commercial properties have covenants in place. These relate to the exterior of the property and are aimed at ensuring that all buildings in the surrounding area retain the same look. Such covenants tend to exist most commonly in market towns where the buildings are older and may specify that certain materials must be used.
A guest post by Eddisons: specialists in commercial property management.
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