If you plan to invest in real estate, you are surely aware of the potential of commercial premises, as more and more investors decide to convert them into apartments. But, how to convert a commercial space into housing? What requirements must be met? Is a change of use license or a project by an architect necessary? We tell you everything you need:

Guide: converting a commercial space into housing step by step

The rise of rental housing is causing a clear lack of supply in many cities, so investors are already targeting commercial premises. And with our online shopping habits, it is possible that over time many ground floors will remain vacant without any activity, which can be converted into housing.

Is it a good idea to transform a commercial space into a home?

Of course! Although they are generally ground floor premises, they can have plenty of light and be spacious, which makes them fit well with the needs of many audiences; from families to young people looking for a place to settle down. It is a way to have more options in the market for users looking for rental housing.

However, premises that are housing can also be renovated and sold as housing to those looking for a completely renovated apartment, like new. There are people who prefer to buy it ready to move in, so they don’t have to deal with the renovation project. This operation can also yield high returns for the investor.

Requirements

Regarding the requirements, for the commercial space to be converted into housing, it must meet the following:

• Minimum usable area of 38 m2 (25 m2 in the case of a studio)
• Built on urban land

There are also requirements that vary depending on the autonomous community and the municipality itself. Here are some of the most common:

• Rooms with windows and illuminated during the day
• Built at ground level, above the sidewalk level
• Must have electricity, plumbing, telecommunications, and drainage installations
• The community statutes cannot prohibit this operation, nor can it be prohibited in the neighborhood or district

Can the Community oppose?

When making such an important operation, it is normal to wonder if the homeowners’ association can oppose it. The truth is that if the community statutes do not indicate otherwise, the owner of the commercial space can convert it into housing without any problem. And even if the neighbors complain for disagreement, in similar cases, the Supreme Court determined that “any owner can convert an office into housing“.

Is a change of use license necessary?

Yes. To convert a commercial space into a home, we need to process the necessary permits at the Town Hall. Once the occupancy license is obtained, the next step is to go to the notary to draft the deed of change of use and then take it to the Property Registry.

How much does it cost?

Regarding the cost of the change of use project and certificate of habitability, it can be around 3,000 euros (license fees not included). As for the total cost of the operation, for an average home, we could easily be looking at around 35,000 euros.

If we take as a reference a commercial space of about 80 square meters, we could achieve a medium-sized apartment with 2 bedrooms and 2 bathrooms. For this example, the price would be as follows:

• Renovation cost: about 500 euros per square meter (40,000 euros)
• Change of use project: about 2,000 euros
• Project management: 1500 euros
• College visa: 200 euros
• Licenses: about 300 euros
• Construction and works tax: 4900 euros

In other words, for a medium-sized home, the price would be around 50,000 euros. But we are talking about a commercial space converted into a home, as an apartment with these characteristics could cost double.

How is the change of use from commercial space to home processed?

It’s as easy as following these steps:

1. Go in person to the Town Hall
2. Request the Major Works License
3. (Optional) Go to the Urban Information Office in your city to learn about the regulations
4. With the major works license granted -> carry out the corresponding renovation
5. Obtain the new deeds at the Notary
6. Register the new deeds at the Property Registry and pay the fees and taxes
7. Modify the Cadastre at the Territorial Cadastre Management
8. Obtain the certificate of habitability and energy efficiency certificate

Keep in mind that, with this change of use, the cadastral value and the payment of the IBI (property tax) will vary (it will be higher).

Is it profitable?

Yes. In fact, it is one of the great advantages of converting a commercial space into a home, as this operation is estimated to be about 50% cheaper than if we did it with an apartment. Therefore, it costs us half of what a house with those characteristics would cost, potentially yielding double the profit. So, despite having to face the renovation costs and taxes for the change of use, it is worth it.

Is it for everyone?

Relatively. It is an operation for which you need liquidity or to have a solvent profile for the bank, as mortgages are more restrictive. When buying a commercial space, they finance 60% of the operation, which means you have to put down more money (although it also costs much less). Additionally, the repayment terms are also shorter.

Conclusions: a new opportunity and not just for investors

The fact of betting on a project that allows transforming a commercial space into a home is interesting because it is a more economical way to access an apartment or a house, in a good area and at a much more economical price compared to an apartment as such. It is an opportunity that, if it fits you, you should not overlook, whether for investment or for yourself.

What do you think of this trend? Do you have any questions? Ask us!