Convert a commercial property to residential in Spain 

The trend of converting commercial property to residential has increased in recent years in Spain. After the Covid-19 pandemic, which led to the closure of many businesses resulting in many premises remained empty. 

If you have doubts about what to do to convert commercial property to residential in Spain, our consulting team prepared this post to guide you.

How to convert commercial property to residential? 🤔

First of all, you have to keep in mind that the competence to grant the corresponding permits will depend on the municipality where the property is located.

When in doubt about how to start, we recommend you to ask at the corresponding City Hall for the requirements.

👉 Requirements for converting commercial property to residential

Regarding the necessary steps to convert a commercial property to residential, in general terms, we highlight the following:

– Urban development compatibility report

First of all, you’ll need to request an urban development compatibility report. This report is about analyzing several aspects, for example, the surface of the property and the area. It is essential that the area is suitable for residential use and that the density has not been used up for new residential development. Each local regulation contains its requirements regarding the habitability of the property, and it is crucial to make sure that the premises comply with them.

– Permission from community of neighbours 

Regarding the authorization of the community of neighbours to convert a commercial property to residential, as a general rule, it will be necessary to refer to the bylaws of the particular building. 

In some cases, authorization is not required but you will have to communicate it to the community. However, you have to keep in mind that if the change will affect the structure of the building, the facade, or affect common elements you will have to obtain the permission of all the owners of the building

– Building permit and change of use

As we explained in a previous post, to carry out renovation works you’ll need to obtain a license. In order to obtain the necessary type of license, you‘ll need to submit a project to convert commercial property to residential prepared by a specialized and qualified technician. This project is also known as “Proyecto técnico de habilitación y cambio de uso”.

You will need specialized technicians to prepare the following documentation:

• Waste management project 
• Occupational health and safety study

Then, you will have to submit these projects to the corresponding city council to obtain the respective authorizations. Remember that you must have the license or authorization before starting any work. Failure to have them may result in a penalty.

– Certificate of Habitability

After having converted the commercial property to residential you will have to obtain a certificate of habitability. To do this, you must present the final certificate of work at the town hall.

The certificate of habitability or of the first occupation is a document that certifies that a house fulfills the technical and hygienic-sanitary minimum requirements. That is an authentication of the legality of the house. 

You will need this certificate to contract services and supplies and sell or rent the property. This certificate is also known as an occupancy license.

Therefore, it must be managed by an architect or quantity surveyor, who will verify that the dwelling complies with all the requirements established by regulations.

The certificate of occupancy will have a certain validity, which also depends on each Autonomous Community.

– Registration

Also, you will have to regularize the new use of the property in the registry and in the cadastre. To do this, you will have to go to a notary to grant the deeds of the new home. Subsequently, you will have to pay the corresponding taxes and submit the deeds for registration in the land registry and cadastre.

How much does it cost to convert a commercial property into a residential property?

With regard to the expenses, we give you an approximate breakdown of costs to take into account if you are thinking of converting your commercial premises into a dwelling.

• Building works

First, you will have to take into account that the cost of converting a commercial property to a residential one will depend on the characteristics of the property, extension, and state. In general, we could say that the reform in a city like Madrid could cost between 10.000€ and 50.000€, depending on the characteristics of the premises. 

• Taxes

1. Tax on Constructions, Installations, and Works (ICIO). It is approximately 4% of the total cost of the renovation.
2. Tax on Documented Legal Acts (AJD). A percentage that varies according to the autonomous community and is between 0.5% and 1.5% of the total cost of the renovation.
3. Real Estate Tax (IBI). Any change or modification of the real estate will entail a modification in the amount of the IBI payment.

• Other expenses

1. Registration in the land registry and notary fees: 400€ approximately.
2. Fees of the architect/technician who carries out the change of use project: between €1,000 and €3,000.
3. Administrative fees (building permit, land registry, certificate of occupancy):  Between 600€ – 1.500€.

Contact us or leave us your questions in the comments section below! 👇👇 We will be happy to help you with the change of commercial premises to housing.