Changing the use of commercial premises to residential: steps and practical recommendations

It is increasingly common for owners of commercial premises who are having difficulty renting them out to consider converting them into residential properties. This transformation can lead to a better return on investment and adaptation to current demand in the property market. However, the process requires compliance with a series of urban planning, technical and legal requirements that should be understood before beginning.

Preliminary checks

• Community statutes: it is necessary to verify whether the registration as a condominium or the statutes prohibit the change of use.
• Municipal urban planning regulations: it must be confirmed that the planning allows the premises to be used as housing and that it complies with the conditions of lighting, ventilation and minimum surface area.

Authorisations and management of works

• Building permit and change of use: apply to the local council for the relevant permit, providing the technical project drawn up by a registered technician.
• Access to common elements: if it is necessary to intervene in common elements, it will be necessary to have the agreement of the community with the favourable vote of 3/5 of the owners and quotas, except in cases where regional regulations require a higher majority (in the case of Catalonia, it is 4/5).
• Completion of works and habitability: once the works have been completed, it is necessary to obtain the final works certificate, the first occupation licence and the certificate of habitability in accordance with the applicable regulations.

Deed, registration and land registry

• Public deed: prepare the deed documenting the change of use and attach the licences and community authorisations.
• Registration: register the change in the Land Registry.
• Declaration to the Cadastre: submit the declaration of change of use to update the cadastral classification.

Taxation by AJD and defence criteria

• Administration criteria: the Tax Agency considers that the formalisation of the change of use may be subject to Stamp Duty (AJD), applying the regional rate to the total value of the property.
• Contradictory case law: there are rulings that reject taxation by AJD or limit the tax base to the amount of the adaptation works.
• Recommended action: in the event of a demand for AJD settlement, oppose it administratively and assess the provisional settlement followed by a request for a refund with interest.

Services we offer

• Review of community statutes and registration documentation.
• Verification of urban planning feasibility in the municipality.
• Search for potential properties.
• Coordination of the technical project and processing of the building permit.
• Drafting of deeds, registration management and cadastral declaration.
• Tax advice and defence against AJD (Tax on Documented Legal Acts) requirements.

Before initiating a change of use, it is essential to assess the urban, technical and economic viability of the project. Having a team of legal advisors, real estate agents, architects and tax experts can make the difference between a simple process and one full of complications.