Commercial premises for sale: how to make it your home?

Shortage of property, prices too high, desire for atypical accommodation, etc. There are many reasons why a property buyer might look at commercial premises differently. The only problem is that, legally speaking, a commercial property is not a residential property and cannot so easily be substituted for it. 

There are rules in the law that must be followed or you risk being fined or even banned from completing the project. If your dream is to acquire a property, here are some tips on how to proceed in the best way.

What permits are required? 

The first question that arises concerns the front of the building. If, like many commercial premises, it has a shop window that you wish to eliminate for obvious reasons of privacy, it will be necessary to submit a building permit to the town hall. This rule applies in general to any major alteration that affects the external appearance of the property, as well as to changes to the supporting structure.

If the alterations only concern the interior, a prior declaration of works may suffice. However, in a municipality of more than 200,000 inhabitants, a change of use must also be requested from the town hall – which is entitled to refuse it. 

Checks to remember

Before carrying out the necessary work, it is also imperative to ensure that the project does not conflict with the local Local Urban Plan (PLU). The latter may in particular provide for specific rules concerning the ground floors of buildings. In some municipalities, the policy of preserving local shops may, for example, lead to a ban on converting them into residential premises. 

In the case of premises located in a condominium, it is advisable to check that the condominium regulations do not prohibit the planned conversion. The premises must also be connected to the essential networks (water, electricity, telephone). Finally, a vote must be held at the general meeting authorising the change of use of the premises unanimously. 

Furthermore, if the total floor area exceeds 150m², an architect is required to secure the work.

Termination of the commercial lease

The premises in question may be occupied and operated by a professional tenant: the commercial lease should be terminated before any conversion is made. It is then possible to refuse to renew the lease when it expires, without paying compensation to the tenant, on the grounds of conversion to residential use. 

If the lease is recent, there is still the possibility of giving notice to the tenant at the end of each three-year period. An eviction indemnity must then be paid, or an equivalent commercial premises must be made available.

Doing the right work

A commercial property does not meet the same requirements as a residential property. In order to give it all the characteristics expected of a dwelling and to make the operation a success, several points must be considered:

• The final dwelling must have a surface area of more than 9m², with a ceiling height of more than 2.20m. 
• If there is no connection to drinking water or telephone, there is a significant cost to the budget;
• If necessary, the electrical installation must be brought up to housing standards;
• Pay attention to the energy performance and the classification of the future home on the DPE, which may have a definite impact on the comfort and value of the property, but also on a potential rental;
• Most commercial premises do not have a kitchen or bathroom: installing these essential facilities in a dwelling can represent a significant budget;
• New openings, windows and doors will probably have to be made, in the same way. 

What about insurance?

Three different types of insurance can be taken out, depending on the content of the project. Firstly, while the work is being carried out, a damage insurance policy will protect you from any defects. In particular, it will enable you to be compensated for damage covered by the ten-year insurance policy as soon as a claim is made, before any attempt is made to hold the contractor liable or to manage a dispute, which then becomes the insurer’s business.

Secondly, if you plan to live in the property, you will need to take out a standard comprehensive home insurance policy. 

Finally, if you wish to rent out the converted property, you will need to take out a dedicated non-occupant landlord insurance policy. 

Beware of tax consequences

An oversight here could put you at odds with the authorities, as the conversion of commercial premises into housing has tax consequences in particular. This leads to the abolition of the territorial economic contribution and transforms the council tax for those still concerned.

Property tax is also calculated on the basis of a cadastral rental value and will not be the same for commercial premises as for residential premises. A declaration of the change of use must be made and submitted to the relevant cadastral office within 90 days of the change. 

Once the change of use is effective, the necessary authorisations have been obtained and the necessary declarations have been made, you are free to occupy the new dwelling, to rent it out or even to resell it as a habitable surface. 

Note that the transformation may concern only part of the premises, which will then become mixed premises, partly residential and partly professional. Moreover, even if it becomes purely residential, a company may still be domiciled at the address of the premises, i.e. at the director’s home.