Buying a commercial property for the first time may seem daunting. In fact, many individuals don’t consider whether or not commercial properties can be used for personal use. This means they might miss out on properties with features that are ideal for them, or that fit within their price range and have more opportunities for development/refurbishment work. Commercial property can also simply be more attractive during periods of economic uncertainty and a lack of supply from the residential housing market. In this post, we’ll be using our knowledge as commercial property conveyancers to answer the question ‘can commercial properties be bought for personal use?’.
What does a personal use entail?
In UK law, a personal use property is one that the individual solely uses for personal purposes. This means it cannot generate revenue for a business and it cannot be purchased as an investment. Simply put, ‘personal use’ for property concerns any purpose for intended to bring enjoyment to the individual who owns.
Is it possible to buy a commercial property for personal use?
Commercial property can be used to serve a non-profit role in an individual’s daily life and therefore be classified as personal use. However, it isn’t as simple as setting up a bed, making some interior changes and moving into the building to live. There are some caveats that buyers should be aware of before they commit to a commercial property for personal uses.
Converting a commercial property for residential use is likely to require you to need planning permission. Although this will depend on the property, as some will have permission requirements already in place. Moving forward without obtaining the relevant permissions can lead to significant issues further down the line. An experienced commercial property solicitor will know to check for this well in advance.
Applying for planning permission can take a while, so this should be factored into the buyer’s timeframe. It may also be necessary for a buyer to need permission from the local authority to make certain changes to the property, even if planning permission is not required. Again, this will vary on a case-by-case basis.
Tax and personal use property
Properties of any kind that are subject to personal use get treated differently for tax purposes. As the commercial property is no longer considered a capital asset (one that generates revenue), it no longer follows the taxation rules for property used for business purposes. For instance, Capital Gains Tax will not apply to the sale of most personal use properties so long as it’s the primary residence of the owner.
What if I’m a service occupier who lives at work?
There are many professions which can require workers or employees to stay overnight between working days. Examples include carers, nannies, hotel workers, and private gardeners. In these cases, use is determined by the landlord (employer). If the property gets put on the market, you would be free to purchase it and then convert it personal use as described earlier.
Mixed use properties
Sometimes, a single property has multiple uses. The best example is a ground floor shop with a flat for residential use above it. This presents buyers with a number of options, as they can choose to convert the commercial portion of the property, purchase only part of the property, or let the ground floor out. In the case of the latter though, this will not fall under the category of personal use as it leads to a generation of income.
Will I need to instruct a solicitor?
Yes. The purchase of commercial property can be very complex and the process can be lengthy. Getting support from a property solicitor ensures nothing gets missed and that you the buyer have a smooth experience. Legal assistance will be provided for key tasks, such as acquiring a lease or planning permission. Specialist property solicitors can also provide services to help with:
- Commercial leases and mortgages.
- The buying and selling of commercial premises.
- Property transfers.
- Planning and development.
Experts in commercial property purchases
Toomey Legal have been helping people buy commercial property across Newcastle and the North East using a combined experience of well over 100 years. Our team is friendly and professional, working to achieve the best results for your purchase. To this end, we are always to contact and will provide tailored advice whenever it is needed. The Toomey team will help guide you through the process of buying a commercial property for personal use is it’s the best option for you. We look forward to hearing from you.