Change of Use from residential to commercial

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  • Change of Use from residential to commercial

    Hello

    I am new to this form. I currently have a residential property empty that is being advertised for rental purposes. I have been approached by a company that runs non-residential care homes for the mentally ill, who are interested in setting up a day centre at my property. Can anyone please advise on the following:

    1). Do I as the landlord need to apply for and obtain a change of use classification approval under current planning regulations with the local authority, or is it the tenant (i.e. the company) who should apply for this?

    2). According to my local authority it takes around 8 weeks for the application to be considered from the time of submission. Should I negotiate with the company that they should sign the agreement prior to obtaining change of use, bearing in mind I am likely to suffer 2 months of void period?

    3). Is there anything that I should be concerned about in letting a residential property to a commercial enterprise, not having entered into such agreements in the past....I have always let on a residential basis.

    Any help is appreciated.

    Regards

    Asgar

  • #2
    Hello

    I am new to this form. I currently have a residential property empty that is being advertised for rental purposes. I have been approached by a company that runs non-residential care homes for the mentally ill, who are interested in setting up a day centre at my property. Can anyone please advise on the following:

    1). Do I as the landlord need to apply for and obtain a change of use classification approval under current planning regulations with the local authority, or is it the tenant (i.e. the company) who should apply for this?

    Prospective Tenant can do this, and are probably best suited anyway as presumably have experience.

    2). According to my local authority it takes around 8 weeks for the application to be considered from the time of submission. Should I negotiate with the company that they should sign the agreement prior to obtaining change of use, bearing in mind I am likely to suffer 2 months of void period?

    It can take longer than this. The company is unlikely to sign an agreement before obtaining planning permission, if they do it is likely to be conditional on obtaining consent. But you could charge some of upfront premium, or a run a temporary agreement of some sort.

    3). Is there anything that I should be concerned about in letting a residential property to a commercial enterprise, not having entered into such agreements in the past....I have always let on a residential basis.

    Generally commercial leases are much more landlord friendly. Make sure that it is drawn up by a solicitor who is experienced in commercial property.

    Any help is appreciated.

    Regards

    Asgar

    Comment


    • #3
      Hi David
      many thanks for your reply. Could I please ask you to expand slightly on point 2 please? What do you mean by an upfront premium, or run a temp agreement?
      regards
      Asgar

      Comment


      • #4
        Some potential tenants who need a change of planning will pay a premium to have the property held off the market while they obtain planning permission. The alternative is to agree that they will pay rent while the process is running, albeit they are likely to want to walk away if Change of Use is not allowed.

        The other alternative is that you continue to market the property and they stand a risk of wasting money on planning permission.

        And I did forget, commercial leases run for a much longer term, but it would not be unusual for solicitors to take 2 months (and that would be quick!) to draw up agreements.

        Comment


        • #5
          David
          Many thanks for that, that makes very good sense. Thanks again.
          regards
          Asgar

          Comment


          • #6
            Originally posted by IMPEX786110 View Post
            David
            Many thanks for that, that makes very good sense. Thanks again.
            regards
            Asgar
            Also:
            a. do you yourself own the freehold estate or only a long leasehold;
            b. is it registered at HMLR in your name or still unregistered; and
            c. is it mortgaged or unmortgaged?
            JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
            1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
            2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
            3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
            4. *- Contact info: click on my name (blue-highlight link).

            Comment


            • #7
              Also:
              a. do you yourself own the freehold estate or only a long leasehold;
              It is freehold

              b. is it registered at HMLR in your name or still unregistered;
              Its registered in my name

              and
              c. is it mortgaged or unmortgaged?
              It is mortgaged

              Comment


              • #8
                Thanks (but your method of intermingling post and answer is confusing!)
                As freehold owner, your only conveyancing-related consent required is from the mortgagee.
                JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                4. *- Contact info: click on my name (blue-highlight link).

                Comment


                • #9
                  Hi
                  Many thanks for the reply. I shall contact the lender to sort this out. The only pressing issue I have currently is being in a good position to negotiate with the prospective tenant who is a private company running day care centres for the mentally ill. I need to be in a strong position to ask for a retainer, while they consider their change of use planning application. I don't want the property sitting there empty for upwards of 2 months whilst all the change of use is being sorted out and I don't get anything paid for it, and continue to be responsible for rates, utilities and mortgage.
                  Regards
                  Asgar

                  Comment


                  • #10
                    Hi
                    Further to my post I have been contacted by the company and they have agreed to start paying the rent from the moment they take it on, i.e. in advance of them obtaining change of use which takes some 8 weeks. Can anyone please suggest a suitable commercial letting agreement that i should use?
                    regards
                    Asgar

                    Comment


                    • #11
                      Originally posted by IMPEX786110 View Post
                      Further to my post I have been contacted by the company and they have agreed to start paying the rent from the moment they take it on, i.e. in advance of them obtaining change of use which takes some 8 weeks. Can anyone please suggest a suitable commercial letting agreement that i should use?
                      Look at Law Society Standard Business Lease.
                      JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                      1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                      2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                      3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                      4. *- Contact info: click on my name (blue-highlight link).

                      Comment


                      • #12
                        Hi
                        Thanks for that. I have had a look on the Law Society website as suggested, however the company to which I am to let my property is also a registered charity in England and Wales. Is the standard business lease therefore still applicable?

                        Thank You.

                        Comment


                        • #13
                          Going straight to lease is not what is wanted here. The company will not want to take on a lease until the planning permission has been secured.

                          As suggested above this is the type of transaction where you need to involve a commercial property lawyer. Even if there were no complications, granting or taking a commercial lease without instructing a commercial property lawyer cannot be recommended.

                          Whilst it is true that if you instruct a lawyer the matter will not get sorted tomorrow, it need not take two months. I think there are quite a few property lawyers out that are looking for work at the moment!

                          Comment


                          • #14
                            Originally posted by IMPEX786110 View Post
                            Hi
                            Thanks for that. I have had a look on the Law Society website as suggested, however the company to which I am to let my property is also a registered charity in England and Wales. Is the standard business lease therefore still applicable?

                            Thank You.
                            Yes, once transaction terms are agreed.
                            Note that there are four versions of the LS Lease:
                            1. Whole building. Term is up to seven years (so no HMLR registration).
                            2. Part of building. Ditto.
                            3. Whole of building. Term is seven years or longer (so lease needs registration at HMLR).
                            4. Part of building. Ditto.
                            JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                            1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                            2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                            3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                            4. *- Contact info: click on my name (blue-highlight link).

                            Comment


                            • #15
                              Originally posted by Lawcruncher View Post
                              Going straight to lease is not what is wanted here. The company will not want to take on a lease until the planning permission has been secured
                              Standard lease, conditional on change of use. Very common.

                              Comment

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