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Jul, 2014

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  1. #1

    Default 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. #2
    Join Date
    May 2008
    Location
    Doncaster
    Posts
    443

    Default

    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

  3. #3

    Default

    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

  4. #4
    Join Date
    May 2008
    Location
    Doncaster
    Posts
    443

    Default

    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.

  5. #5

    Default

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

  6. #6
    Join Date
    Sep 2006
    Location
    Sheffield
    Posts
    39,411

    Default

    Quote 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).

  7. #7

    Default

    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

  8. #8
    Join Date
    Sep 2006
    Location
    Sheffield
    Posts
    39,411

    Default

    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).

  9. #9

    Default

    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

  10. #10

    Default

    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

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