Posts

Nick Jackson

Commercial Property change of use – what’s the process?

In a perfect world, you would be able to convert a commercial property from one type of business to another without having to jump through too many hoops or get tangled up in too much red tape.

Unfortunately, though, this world is far from perfect, and a commercial property change of use can involve a surprising amount of paperwork.

Ensuring you comply with building regulations, going through the planning permission minefield, and understanding the various building use ‘classes’ is vital.

So if you’ve just taken ownership of a new commercial property that used to be a factory, and you want to change it into an ultra-trendy ‘industrial-themed’ restaurant, what do you need to do? Indeed, what extra factors should you consider before making the purchase?

Know your ABC
Under the planning system, many buildings (both commercial and residential) fall into various ‘classes’ and are given a code to signify their lawful use. These are known as ‘use classes’. These use classes have recently been reviewed and a new Class E introduced. Class E includes various Commercial, Business and Service uses [including the previously revoked Classes A1/2/3]. The B2 (General Industrial), B8 (Storage) or C3 (Dwelling houses/residential housing) classes remain. Some buildings such as casinos, public houses and pay day loan shops are defined as suis generis uses and do not fall within a specific use class.

Every building has a designation, and it is possible in many cases to change their classification, depending on what the original use was, what you want to change it to and in some cases how your local authority views the proposed change.

Why are use classes so important?
A use class can be used to determine whether or not you can change a building’s use without the need to apply for planning permission and learning how to navigate your way around the various classes could make turning a building that used to be a pub into a hotel or restaurant, for example, much easier.

However, some changes of use will still need permission, so you’ll need to know exactly what classification the building currently falls under, as this will help determine whether a change of use requires planning permission.

How do I find out what my building classification is?
You can find a full list of use classes on the government’s planning portal, but it may take a little bit of investigation to determine exactly which class a building falls into, especially if it has had a variety of uses over the years. You can then check your own records, including deeds, land registry records and other official documents to determine the current classification. You can also get more information from the Town and Country Planning (Use Classes) Order 1987 as amended, or contact your local council’s planning department, who may have records concerning the classification of your building.

What if the property was originally classified as residential?
If the building has a C3 (residential housing) classification, then getting it reclassified for commercial purposes may take some doing, especially if you’re right in the middle of a quiet domestic neighbourhood. You’ll need to check if the change of use requires planning permission. If so, go through the full process of applying to the planning department for permission for change of use. They could refuse this on the grounds of the impact it may have on your neighbours. Or they may find in your favour and allow you to change the use of the building, but with certain restrictions.

If your change of use is permitted under the Use Classes Order, then you will not need to make an application for prior approval or make a planning application. However, it’s important to do your homework thoroughly and don’t simply assume that your change of use is on the approved list. It can be very difficult to get retrospective planning permission for a change of use application, and if it’s declined then you would have to stop using the building for the new purpose which could be expensive, particularly if the local council were to bring enforcement proceedings. Be warned; most external building work associated with a change of use is also likely to require planning permission and therefore an application to your local planning authority.

If you have to put in a commercial property change of use application then it is likely to take at least 8 weeks for the planning permission process to go through, depending on the complexity of the project. Make sure you provide as much information as you can, and remember that the application will need to show that you’ve considered the potential impact on the local environment with regards to the increase in traffic or the requirement for public parking spaces and access for delivery vehicles. If you do need to go down this route then it’s essential that you talk to an expert in planning and property law, who will be able to take you through the process and help ensure every box is ticked to maximise the chances of your application being approved.

Is there anything else I need to think about?
Commercial Property change of use doesn’t just involve letting the local planning department know what you’re doing. You’ll need to consider other issues such as Building Regulations compliance. From fire doors to flame-retardant building materials, energy efficient lighting and public facilities, you’ll need to plan very carefully, especially if the public is going to be allowed access to your building.

If food preparation is part of the plan then hygiene will be a big factor. For example, if you’re turning a building that was previously residential into a public house then you’re going to need to install catering facilities that meet all current hygiene regulations.

You’ll also need to think about the type of building insurance you have, and a huge range of other considerations such as commercial waste management, any licences needed, business rates, and even how many toilets you have on-site to conform with Health & Safety requirements.

Make sure you’ve got a commercial property legal expert in your corner from the outset so things go as smoothly as possible.

For more information about our Commercial Property services, please contact a member of the Commercial Property team on 01244 356 789 or email info@cullimoredutton.co.uk

Please note: This is not legal advice; it is intended to provide information of general interest about current legal issues.

Kara Nicholls

First Time Buyers Guide

Buying a home can be stressful, especially for first-time buyers, so it’s wise to do some research to ensure you know exactly what to expect. In this guide we share an overview of the process and do some jargon busting to help you enter the property market with confidence.

Conveyancing is the term that refers to the legal process of transferring one person’s property (the seller), to another (the buyer)

What does the process involve?
Put simply; this is what conveyancing looks like from start to finish:

  • Get your mortgage sorted out before you start looking, so you know what your budget is.
  • Go house hunting and find the property you want.
  • Put in an offer, i.e. tell the seller what you’re willing to pay for the property. This is also the time to raise any conditions you have.
  • Instruct your solicitor – our Conveyancing team has years’ of experience in helping clients buy and sell property.
  • The offer’s accepted. At this point, you’ll need a survey to check the property’s condition, and your solicitor will review any legal issues.The checks to be carried out by the Surveyor will include a wide range of examinations, including the structural integrity of the property, whether there’s any signs of subsidence, damp or damage, and whether there are any existing plans for the immediate area that may impact the property. Your solicitor will carry out searches with the local authority, Drainage and Water utilities and environmental bodies to find out the planning history of the property, if there are common drains that serve multiple properties, if there is any history of land contamination, or if you are responsible for any shared public access points. They’ll also look at the deeds and boundaries to check on rights and restrictions affecting the property and will raise a number of enquiries with your Seller’s solicitors – some standard e.g. to see if there are any disputes with neighbouring properties and others that are particular to the property you have chosen. If everything comes back okay, you can move onto the next level – buying your home.
  • Exchange: This is when you pay your deposit and fix a completion date, which means you can’t back out of the deal without losing a lot of money. To be in a position to exchange you must have a detailed mortgage offer in place, your Solicitor will check that all Lender conditions relating to the property can be satisfied. Some issues e.g. gifted deposits, plan or title discrepancies, lease terms etc may need to be reported to your lenders for them to approve before you can exchange. You should note that nobody is legally bound to complete the transaction until contracts are exchanged.
  • Completion: At this stage your solicitor will transfer the rest of the money from your lender in exchange for both the keys and the deeds. At this point, the property is legally yours.

 

Top Tips:
As part of the process, you will receive a list of fixtures and fittings the seller is willing to include within the cost of the property. If you are buying anything extra – tell your solicitor who will get this in writing. That way you’ll manage your expectations and won’t get a nasty surprise upon arrival.

Don’t book the removal van until the completion date has been fixed by way of exchange of Contracts. If you are doing a simultaneous exchange, and completion then be aware that there is risk in booking removals if the plans have to be changed or do not go ahead.

If anything changes in your circumstances after your mortgage offer has been issued you must tell you lender and your solicitors.

What is Gazumping?
This term refers to another buyer offering more money to the seller than you have, and the seller goes back on the deal you made. Sadly, you can’t legally protect yourself from this happening if this occurs prior to exchange. However, it’s always worth asking the seller to take the property off the market as part of your original offer. This rapidly reduces the likelihood of another buyer submitting a higher price.

What is Gazanging?
Gazanging is when the seller cancels the sale to stay in their property. This could occur when the market price shoots up as there’s a good chance the seller will make more money if they wait to sell in a few months’ time.

Finding a mortgage and doing all the checks
If you are buying a property, then make sure you’ve got your finances in place first. If you go house hunting before you’ve gone mortgage hunting, you’ll complicate the process, especially if you don’t get the full amount you need and have to scrabble around to make up the shortfall. Don’t automatically go with the first lender you find; mortgage products change almost daily. There are so many mortgage lenders out there, all hustling for your business, especially if you’ve got an excellent credit score. It’s almost inevitable that another lender will match your bank’s offer, or even try to tempt you with a better deal.

Always get a personalised mortgage illustration: this should highlight the important features of your mortgage. Taking out this kind of loan is a massive commitment, so do your due diligence and don’t sign up for anything you’ll regret later on. Remember, a mortgage typically lasts for 25 years, so this is a long-term commitment and not something to be rushed into without a lot of careful thought.

Once you’ve got your finances straight, it’s time to…

Choose Your Conveyancing Specialist
You need a Solicitor, Legal executive or a Licensed conveyancer who is qualified in property law. They’ll handle all the paperwork and conduct the necessary searches to satisfy both the Land Registry and local council. They’ll also:

  • Draft the contract
  • Manage the exchange of money between the buyer and the seller

Top Tip: A cheap conveyancing fee will probably mean that the majority of your work is being carried out by someone who is not qualified. Money is nearly always tight for first time buyers but don’t choose a firm on price alone. Reputation is key as is personal recommendation.

Ask who is going to be carrying out the work for you and what their experience and qualifications are.

It’s recommended that you find a legal expert who is familiar with conveyancing early on. Ideally find someone who is local (either to you or the property or is known to family and friends) and willing to communicate with you in a way that works for you. This makes the process a whole lot smoother and helps to ensure everything goes through as quickly as possible.

For more information about our Residential Conveyancing services, please contact a member of the Residential Conveyancing team on: 01244 356 789 or email info@cullimoredutton.co.uk

Please note: This is not legal advice; it is intended to provide information of general interest about current legal issues.

 

 

 

Patricia Taylor

Patricia Taylor appointed to the role of Trainee Solicitor

We are delighted to announce that Patricia Taylor has been awarded a training contract here at Cullimore Dutton and will take up the role of Trainee Solicitor with immediate effect.

Patricia, who studied for both the Graduate Law Diploma (GDL) and Legal Practice Course (LPC) at the University of Law, joined the Utilities team in February 2021 as a Paralegal, and is a talented individual with immense potential who we hope will have a long and successful career here at Cullimore Dutton.

Upon joining our business, Patricia stated her desire to secure a training contract and ultimately qualify as a solicitor. Patricia is a diligent legal professional who puts clients’ needs at the forefront of everything she does, and this promotion is reward for her professional attitude, hard work and commitment.

Patricia’s appointment to this position follows the awarding of a training contract to Trainee Family Law Solicitor Jesca Knott in April 2021. Both appointments are clear examples of the career pathway which is available to all our team and further demonstrates our commitment to changing the lives of our Colleagues, Clients and Community. We hope many of our colleagues follow in Patricia and Jesca’s footsteps and advance through our career pathway during their time with us.

We would like to wish Patricia every success as she begins this new chapter of her career, and to offer our continuing support to her throughout her training and beyond.

Good luck Patricia.
The Cullimore Dutton team 

Stuart Hill

Sun glimmers on the horizon for leaseholders

Change is in sight for buyers of new leasehold properties, with the passage through Parliament of a bill that will see the ending of ground rent, but it will not help existing leaseholders struggling with onerous terms.

The Leasehold Reform (Ground Rent) Bill applies to new, qualifying long residential leases in England and Wales and was tabled in response to one of the Law Commission’s recommendations designed to overhaul residential property in England and Wales.

The recommendations address unfair practices in the leasehold system, which has already seen a ban on leasehold sales for almost all new-build single dwelling houses, a practice which had become prevalent with developers in recent years. Some of those arrangements saw ground rents doubling, with leaseholders facing annual bills for thousands of pounds and their homes rendered effectively unsellable.

This resulted in enforcement action by the Competition and Markets Authority (CMA), the competition watchdog, against four housing developers for mis-selling under consumer protection law. The CMA has also investigated a number of investment firms, which bought the freeholds from the developers and continued with the same leasehold terms.

The action has seen formal commitments from investor Aviva and builder Persimmon, with Aviva committed to removing terms which cause ground rents to double, and Persimmon offering leasehold house owners discounts on buying the freehold.

It had been hoped that legislation to introduce zero ground rent might be applied retrospectively, which would have been a big boost to those locked into high ground rents.

Unfortunately, neither the CMA’s action nor the abolition of ground rent on future leases will help those tied into onerous leasehold terms, unless their freeholder responds with similar action. While the watchdog has said that legal action will follow if others do not respond, more may need to be done to encourage the developers and investment firms involved to follow the lead of Aviva and Persimmon.

Leaseholders affected may need to consider taking action themselves, maybe together with their neighbours, by getting advice on their position and approaching the freeholder to force their hand on a response.

Most flats and some houses in England and Wales are owned on a leasehold basis, giving the owner the right to live in the property for the term of the lease, commonly between 150 and 999 years. Some flat owners may hold shares in the freehold of the overall building, with each having a say in the running of the building, but where a third party is involved, the freehold may be owned by the original developer, an institutional investor, property company or an individual.

Current and potential leasehold property owners can check out guidance from the CMA, which includes how to deal with fees and charges which seem unjustified.

Further legislation has been promised by the Government on leasehold reform, including a shift to common-hold, which enables residents to manage shared spaces themselves.

If you are considering buying or selling a leasehold property and would like a free initial consultation with one of our specialists contact us on 01244 356 789 or email info@cullimoredutton.co.uk.

Please note: This is not legal advice; it is intended to provide information of general interest about current legal issues.

Nick Jackson

Should you buy or rent a commercial property?

If you are looking to move your business, there is an important decision to be made around whether you should buy or rent commercial property.

There are several factors you should consider and making the right decision can be challenging.

In this article, we look at the pros and cons of each to give you an idea of what you may wish to think about or discuss with your legal adviser.

 

The pros and cons of buying a commercial property

Potential investment opportunity
Firstly, like with any property purchase, buying a commercial property could be seen as an investment. The property may increase in value, and when you own your business premises, you can profit from this increase instead of your landlord. You can also offset the interest paid on the mortgage against your net profits.

However, you will need a large deposit to secure the property – often around 20-30% of the purchase price – which may not be viable for smaller businesses. It is unlikely, but possible, that the property could decrease in value too, which could mean that you owe your lender more than the property is worth. Investing in property is always a risk, so you should consider carefully before deciding to buy.

Planning your business’s financial future 
Another key benefit is that you can plan better for your costs. With a commercial property, you may be able to fix your mortgage payments for up to ten years. However, when you rent commercial property, you may be subject to rent increases making it harder to create business projections. It can also make conducting business more difficult where you are operating on tight financial margins. A large rent increase could even make your operation or business no longer viable.

On the other hand, if you have a variable rate mortgage on the property, payments can rise by a significant amount, so this may not be as much of an advantage as you might think.

Option to sell 
Although you can fix your mortgage payments for a long period, you may find that your business premises need to change or are no longer fit for purpose. If you own your commercial property, you can sell whenever you want. However, if you are renting your commercial property, you may be tied into a lease that can be difficult if not impossible to bring to an end if there is no termination or break clause. Some commercial properties have lease terms of up to 15 years, which may not work for your business requirements.

Making necessary changes to the premises
When you own your commercial property, it allows you to make any changes to the property that you see fit. Making such changes can be crucial to business operations, and this freedom should be a key consideration when you are thinking about buying or renting a commercial property. You can also sub-let all or part of the building, which is often not possible when you are renting a commercial property.

You may, of course, be able to make changes if you rent a commercial property, but this will be subject to obtaining the landlord’s permission.

 

The pros and cons of renting a commercial property

For most, the biggest disadvantage of a rented commercial property is that paying rent will never offer a return. You won’t benefit from any increase in the commercial property’s value, and it can feel like money wasted. However, there are many benefits to renting a commercial property too.

Faster and more straightforward
Typically, the process of getting into a rented commercial property is much quicker and more straightforward. You can cut out the process of securing a mortgage and conveyancing, allowing you to relocate quickly.

No large deposit required
Similarly, you won’t need to save up a large deposit to rent a commercial property, making getting new commercial property easier for smaller businesses. If your business has good cash flow, you could end up renting a great space you could never afford to buy, boosting the image of your business.

Subject to lease conditions
There are of course disadvantages to renting, mainly that you will be subject to the conditions of your landlord. You may need to pay for repairs where you are on a ‘full repairing’ lease, and any changes you make could add value to your landlord’s commercial property at the expense of your business.

Speak to an advisor
Whether you choose to buy or rent a commercial property will depend on your specific needs and circumstances. You should seek advice from an experienced commercial property solicitor such as ourselves, we can explain your options to you.

For more information or to arrange free half hour consultation with a member of our Commercial Law team, please contact us on 01244 356 789 or email info@cullimoredutton.co.uk.

Please note: This is not legal advice; it is intended to provide information of general interest about current legal issues..

Sarah Davies

In for Christmas

With only 15 weeks until Christmas Day; now is an ideal time to agree your purchase to give you the best opportunity to be in and settled in time for Christmas.

The conveyancing market has seen a massive increase in transactions over the last 12 months due mainly to the stamp duty holidays which come to an end this month. Average transactions are now taking 12-14 weeks to complete due to delays seen across the whole conveyancing market.

We have a number of free resources to help you prepare for your home move including our:

Getting ready for Sale Checklist  (PDF Download).

Sale and Purchase Key Stages

Conveyancing quote builder

If you are looking to move and would like to be in for Christmas contact one of our specialist Conveyancing team on: 01244 356 789 or email info@cullimoredutton.co.uk

Please note: This is not legal advice; it is intended to provide information of general interest about current legal issues.