Residential vs Commercial Property: What you should know

The property market is always changing, which presents various challenges for business owners, landlords, tenants, buyers, and renters. Changes within legislation and rules mean that residential and commercial properties can change their uses. In this article, we’ll be breaking down the key things you need to know when it comes to residential and commercial buildings, so you can get a better insight into where you stand and how to proceed with your next property purchase. 

Understanding the differences between a commercial and residential property

There are several differences between commercial and residential property types you should be aware of, but the main one is what each one can be used for. Certain regulations stipulate the uses for different properties, which can impact where the building is located, how it is constructed, its layout, price, and more. 

For example, residential properties make less profit when rented out and typically have shorter contracts. Whereas commercial properties are normally more profitable, and contracts are in place for longer to reduce the effect on the business using the property. 

What are the uses for commercial property?

Commercial property is designed for business purposes. This could be offices, retail, entertainment, and many more. As such, they have different layouts than what you would find in a house or other residential property. 

These buildings are not meant to be lived in, so certain facilities will be different to accommodate varying amounts of people as well, whether that includes staff or members of the public. For some businesses, storage space will also need to be considered. 

As previously mentioned, they usually have longer contract terms, meaning there will be minimal disruption to the business by providing consistency and reducing how often they need to move to a new premises. 

 If you’re currently in the process of purchasing a building for your business, using experienced commercial property solicitors like the Toomey Legal team will help the process go quickly and smoothly. 

How can residential properties be used?

Residential properties are made to be lived in. The sizes are often more uniform than commercial buildings, although there will always be some differences based on the property itself, location, and the style of the home. They can be houses, bungalows, or flats in a building, but all are classed as residential. The facilities being offered are different from commercial and their public address can’t be used to operate business from. 

Contract lengths are usually shorter for residential rentals, and the profit margin is smaller for landlords. Despite there being some risk of tenants causing damage to the property or general wear and tear having an effect, most people will care for the place they’re living in, gaining stability, and provide a regular income for the property owner. 

What are mixed-use properties?

Some properties can be categorised as mixed-use. This means that in a building, there will be properties that are used for both commercial and residential purposes. Having a certain space in the building still means you are required to follow the rules of that particular area, rather than changing them to suit your needs. 

Can you change the use of a property?

When you think you’ve found the right property, you might feel that it’s worth snapping up regardless of what type of building it is or usage rules, but this could be more problematic than you think.  

However, changes to legislation in recent years has made it easier to alter the use of a particular property, from residential to commercial and vice versa. This is because ensuring properties are filled and being used is a priority for many local authorities, even if it is being used in a different way than previously intended. 

There will be a significant amount of work involved. Safety standards are very important, and steps will need to be completed to make sure the building is fit for the purpose you want it for, but the opportunities could be there for you to make the most of. 

Can commercial property be used as residential?

It is possible to change a commercial property to residential use, but there are some key things to be aware of within property law before you make a decision. For example, you will need to check with, and sometimes apply to, your local authority to confirm that you’re able to carry out the work you want on the building you’re interested in. Some exceptions might block you from getting the work you need done, such as it being a listed building or being situated in a national park or conservation area. 

Each commercial property is provided with a class based on what it has been used for in the past. To make sure your application is successful, you will need to apply to change the right class for your new usage. Specific types of commercial property don’t require planning permission to make the alterations you want. 

Some of these include shops, warehouses, showrooms, banks, and more. Even without planning permission though, you will still need approval from your local authority. When you have gone through all these steps you will be ready to start work and turn your commercial building into a profitable venture. 

Changing a residential property to commercial

Changing a residential property to a commercial use follows similar steps for the previous commercial to residential process, but there are a few extra details to consider. 

Firstly, you’re not just changing the property but the area surrounding it too. Your new business will attract more people, meaning footfall and traffic will be affected. This is an important factor if you’re in a suburban area and need to ensure your neighbours are happy with the change. If you’re close to a main road or area with other businesses and commercial properties this will be easier to do. 

Also, class changes can be a key consideration as well, so you need to be clear about the type of business that can use the converted property. This will influence how neighbours react to your plans, the changes you need to make, and what needs to happen to make the building fit for your intentions. 


At Toomey Legal, our team has extensive experience in both commercial and residential property legal matters, such as the residential conveyancing process, which is an essential part of purchasing a new home and commercial property transactions. If you need help with residential conveyancing in Newcastle or any other matters relating to residential or commercial property, contact us today.