How Can You Convert A Residential Property to Commercial Property?

Before you intend to construct any commercial establishment on your residential land, you need to understand the zoning ordinances. For this, you need to know the procedures, outlined by the municipal board, under which your land is currently held.

In this article, you will know the basics of zone changes, and procedures to follow while converting your residential land into commercial use.

Steps in the Conversion of Residential Property to Commercial Property

Research on your Zoning Laws

It is essential to know everything about your local zoning laws, which primarily deals with the construction of buildings, and the use of the property or land.

For this, you need to look for zoning maps online and compare the zoning trends. Switching a property from residential to commercial requires a request to change the zone. And, this can be only if you prove that switching would benefit the entire community.

Visit your Nearby Municipal Office

For the conversion, you will be required to visit your Jurisdictional Municipal Office and request for granting you a permit for changing your zoning laws.

Under such, you can hire any professional surveyor, an architect, or an attorney to validate your case, if the zoning change hearing is to be held in the court.

Meeting the Housing Societies

For conversion of your residential property into commercial, you need to meet with any neighborhood associations in your location. In the meeting, you need to discuss the planned commercial development.

And in discussing with them about the change in the zoning laws, you might face opposition from some of the members, who might disallow the land conversion, based upon an increase in noise pollution, traffic influx, and heightened human activity due to your commercial entity set-up.

But the only way to convince them is by offering them perks, building a good rapport, etc. This is essential because, before anything is finalized on the conversion both the government and the community approval are required.

Further, on their approval, a no-objection statement from all the society members is mandatory, in addition to normal approvals.

Collection of Land Description Details

If your state sees the conversion permissible, you will be given a sanction letter from the respective authority.

After all the paperwork is done, and you collect your land description details, you need to pay the stamp duty. Then the zoning change request will be printed in the local newspaper, and sometimes, you might hear grievances redressal from the public.

However, after all the pleas have been heard, the zoning ordinance will be changed or might be reviewed or restructured based on the land-use pattern as the locals have been requested.

Have a Backup Plan

Under conversion, plan, the area for your intended business, and decide the nature of business you want to use the property for.

Further, you need to also have a backup plan, if you do not seek approval with the plan you worked out for. So, keep alternative options, as in the case, you need to work on the other prospects.

Government Approval

Generally, most of the applications on the conversion of commercial property are rejected in residential areas. This is so because, to prevent new developments from harming the existing residential. Unless they do not infringe on the privacy of residential establishments.

So, you need to have an attractive, and well-thought-out proposition that stands out in balancing the risks, and be highly rewarding while making the project profitable.

Essentials to Commercial Property

Further, on the approval by the government, completion of all the paperwork, and payment of stamp duty, the final decision on the zoning laws will be made accordingly, and thereby the conversion is placed at the final execution.

Further, after the application in the prescribed format to the municipal office, depending on the terms laid upon in the agreement, and the number of years specified therein, the intending parties has to option either between rent agreement or a lease agreement.

This is essential because while conversion a residential property into commercial property, knowing either you are opting for lease or rent can help in setting out the important issues for the tenants, such as the length of the tenancy, the amount of rent, the deposits, the tenants must pay, and also the number of people who can live in the rental property.

Provisions for Charges on Commercial Property

When you convert a property from residential to commercial, it is solely dedicated to commercial use and does include paying specified fees to the municipal body such as charges on water, and electricity supply, about the parameters like area, size, and form of business you undertake.

Besides, while going for commercials would also levy certain norms like provisions for washrooms for customers, waste disposal tools, etc. by the civic authority. These are just some of the mandatory provisions, to follow while carrying any business activity in the commercial space used.

License Authorization

If the commercialization property is to commence a new business activity, a valid license needs to be obtained under the Shop and Establishment Act, sanctioned by your state.

License authorization being issued by municipal bodies is essential to obtain the consent or permit from the government or any other regulatory for enabling the subsidiary to maintain and operate its business and properties.

Further, for applying for, license, you need to visit the official site of the Municipal Corporation of your state. Visiting the site, you need to choose the ‘online trade license new registration’ and read the terms and conditions thereon.

Then you need to fill up the necessary details in the fields provided, and submit the documents asked for validation and authentication like Pan Card, etc and click on ‘Next’ on successful registration.

In general, it takes 7-10 days in processing the application for license authorization. However, depending on the region, it might also take longer than usual.

The Bottom Line

Conversion of a residential property into commercial property, no doubt, seems a feasible option. As it is both in your comfort and gives you a chance to indulge in a specific economic activity.

However, following the rules is indispensable as its ignorance can cause litigation charges.

Hence, it is good to consult any trustworthy and notable property managers or real estate agents before opting out and moving in from residential to commercial properties.