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Full PP or Permitted development ?


Nickfromwales

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A friend has a shop, which is at pavement level, accessed from the front / roadside. 

The plot drops steeply and there is a full basement flat underneath, and then another above ( both likely to have been the original accommodation ). 

The shop owner wants to refurb the flats and rent them out, after they have remained dormant for a few years ( 10 or more me thinks ). 

When I told them to apply to BR, they were told by the BR staff to get PP first, but I thought if they were existing then would that not just be PD?

After a few brief chats it seems the residential parts may never have actually been 'registered' ( a mix of A3 and A1 ? ) so that's maybe where the confusion lays. Would the BR dept maybe have made an error in stating that she seek PP, and maybe they meant PD? They're ringing Monday morning so should I get them to ask if this should get the go ahead without delay, via PD? Or would that stir the hornets nest? 

I fully understand the BCO needs to come and state what I need to do to comply with regs ( to get a completion cert etc ) but would the property not have just inherited the right to residential dwelling status if it can be demonstrated that they have been used like that for decades? The flats each have kitchens and bathrooms, and divisible spaces for living and sleeping so that should be easy enough to demonstrate. 

Any thoughts or tips for approaching the relevant depts would be much appreciated.

Ta :)  

 

 

Edited to add : The shop is in a densely populated residential area, and has been there for decades. Neighbours to the side are friendly with the owners and the one to the rear is problematic ( moans about commercial bins etc ). 

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Simple way to check is Council Tax records and the Post Office address finder. 

 

If they are listed in PAF online as say "Flat 1, 43 High St" etc then chances are they have also had a council tax bill.  Obtaining the property reference for council tax could be fairly simple at that point however it would beg the question who has been paying (or not) the council tax. 

 

If no separate address and no council tax records then it's a change of use although you could reasonably push for a certificate of lawful development if it's been done for a period of time. 

 

It will need to be checked carefully but the first step (PAF) can be done online with no-one even knowing assuming you have the post code 

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In the case of an unlawful "change of use" it's 10 years not 4 that they have to initiate enforcement action. eg You would have to provide evidence that the change of use to residential occurred > 10 years ago.

 

Something like paying council tax on the flats for that period might be enough but collect every scrap of evidence you can find. 

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Actually the law changed last year (?) so that converting a shop to residential is now Permitted Development...

 

http://www.homesandproperty.co.uk/property-news/buying/planning-advice-can-we-convert-an-empty-shop-into-our-first-home-a100661.html

 

So it might be easier just to apply for a certificate of Lawfulness on the grounds that the conversion would be Permitted Development.

 

The bonus if this approach is that it's now a conversion so you can reclaim the VAT.

 

If you go the other route you face a contradiction... To prove change of use you have to prove they were used as flats for 10 years and that may make them ineligible for the VAT reclaim scheme (not empty long enough).

 

 

 

Edited by Temp
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https://www.planningportal.co.uk/info/200130/common_projects/9/change_of_use/2

 

Quote

 

Changes of use not requiring planning permission



 
From: To

A1 (shops)

 

To:

A2, or up to 150m2 A3 subject to Prior Approval, or up to 200m2 D2 subject to Prior Approval and only if the premises was in A1 use on 5th December 2013. A mixed use comprising an A1 or A2 use and up to 2 flats may also be permitted subject to meeting certain conditions. C3 if the cumulative floorspace of the building is under 150m2 and subject to Prior Approval.

 

Will try and find out more about this.

Edited by Temp
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Might also be relevant although note the VAT implication I mentioned above if arguing it's already mixed use.

Quote

 



Mixed use 

Where a development comprises a “mixed use” in the retail uses classes and betting office / pay day loans shop category then there are also some permitted development rights for changes of use of that mixed use, similar to the presiding use identified in the table above. Check with your Local Planning Authority (See GPDO Schedule 2, Part 3, Class M).
 

 

http://www.legislation.gov.uk/uksi/2015/596/schedule/2/part/3/crossheading/class-m-retail-or-betting-office-or-pay-day-loan-shop-to-dwellinghouses/made

 
Quote

 

Permitted development

M.  Development consisting of—



(a)a change of use of a building from—



    (i)a use falling within Class A1 (shops) or Class A2 (financial and professional services) of the Schedule to the Use Classes Order;



    (ii)a use as a betting office or pay day loan shop, or



    (iii)a mixed use combining use as a dwellinghouse with—



         (aa)a use as a betting office or pay day loan shop, or



         (bb)a use falling within either Class A1 (shops) or Class A2 (financial and professional services) of that Schedule (whether that use was granted permission under Class G of this Part or otherwise),

 

to a use falling within Class C3 (dwellinghouses) of that Schedule, and
 

 

Sorry for repeat edits. Having problems with formatting.

 

 
Edited by Temp
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I think the first step is to ask the planners what they think the current "use class" is for the bits you want to refurb/convert.

 

If they say they think the flats are still part of the shop/retail A1 or storage then I think you can change them to residential under PDR and reclaim the VAT using the self build VAT reclaim scheme for conversions. 

 

If they think they are already residential use class then no need to involve planning and you have to prove they have been empty for 2 or 10 years to get partial/full VAT relief. I think it will only be zero rated if a VAT registered builder does the refurbishment. There is no DIY reclaim scheme for empty houses. 

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Other issues I can think of..

 

Might be worth thinking about the tax position. eg If the business/shop owns the flats then is it better for the business to divest itself of the flats (perhaps sell them the business owner personally) before or after conversion/refurbishment when the value is higher? 

 

Don't let anyone move in before the refurbishment starts or you loose the ability to reclaim the VAT (no longer empty for 10 years before work starts). However they can move in a few days after refurbishment starts as that's allowed!

 

I recall there is an issue with VAT if a property is rented out immediately. I'll try and find out more. 

 

 

 

Edited by Temp
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I think the VAT problem I was referring to above only applies if a VAT registered business lets out the flats but you need to check this issue further or you could end up liable for VAT on the rental income...

 

http://www.revenue.ie/en/tax/vat/leaflets/property-guide/letting-property-new-system.html#s4

 

4. How does a landlord opt to tax a new letting? (Section 97(1)(b) and (c))

A landlord who claims a deduction for input tax incurred on the acquisition or development of a property, which is to be used for letting, is treated as having exercised the landlord's option to tax the letting of that property.

Edited by Temp
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I have already advised the 'client' that they need to sit down for an hour or two with their current accountant as I've already suggested I go labour only and the materials come through them for the purposes of vat as I am not registered. Well, only as part sane anyhoo.  

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48 minutes ago, Temp said:

Other issues I can think of..

 

Might be worth thinking about the tax position. eg If the business/shop owns the flats then is it better for the business to divest itself of the flats (perhaps sell them the business owner personally) before or after conversion/refurbishment when the value is higher? 

 

Don't let anyone move in before the refurbishment starts or you loose the ability to reclaim the VAT (no longer empty for 10 years before work starts). However they can move in a few days after refurbishment starts as that's allowed!

 

I recall there is an issue with VAT if a property is rented out immediately. I'll try and find out more. 

 

 

 

 

For rental properties you can opt out or in for making the rent Vatable, but there are complications and I do not know if the option is related to VAT on build etc.

 

I do not know the details, business / residential etc.

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1 hour ago, Temp said:

I think the first step is to ask the planners what they think the current "use class" is for the bits you want to refurb/convert.

 

If they say they think the flats are still part of the shop/retail A1 or storage then I think you can change them to residential under PDR and reclaim the VAT using the self build VAT reclaim scheme for conversions. 

 

If they think they are already residential use class then no need to involve planning and you have to prove they have been empty for 2 or 10 years to get partial/full VAT relief. I think it will only be zero rated if a VAT registered builder does the refurbishment. There is no DIY reclaim scheme for empty houses. 

Sounds like the first step. :)  

Really appreciate the help as this lot is normally already sorted before I get on site. Not my area of expertise at all. 

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2 hours ago, Temp said:

If you go the other route you face a contradiction... To prove change of use you have to prove they were used as flats for 10 years and that may make them ineligible for the VAT reclaim scheme (not empty long enough).

I think the client will be happy just to get these done and rented tbh. Claiming the sub £4k vat via the business maybe an option ?

As this is an investment, I don't know what their accountant will advise. Link to the business and write it off / other ?

I have to draw a line somewhere, so advising them to seek advice through their accountant is where I'll detach myself I think. Offering to go labour only is the most I can practically offer, and also gives some transparency to my costs. 

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Update. 

Have spoken to both PP and BC this morning, quoting the various bits of info above from you good people, and it's quite clear that neither PP, PD nor ( amazingly ) is BC required as they're not change of use. Quoted the timescales of previous occupancy etc and use, and inherited status etc, and no resistance whatsoever.

RESULT ! :)  

Ive insisted, however, that BCO calls out to examine the property from head to toe so I can sleep at night ( and more importantly the residents of the flats ) and that's taking place tomorrow morning at 11:30. ;)  Spoke to the attending BC officer and what a thoroughly nice bloke. He said he'd call around, no fees required, and advise me accordingly. Should he deem intervention necessary then we'll stump up and tow the line. 

Many thanks again for the help and advice.

Ill round this off after the site meeting.

B| 

 

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So the Planning department must consider them to be residential use still/already? That's good news.

 

Ditto no BC Approval is also good news. Although some changes to the wiring may require the Electrician to issue a certificate which gets copied to BC. 

 

Usual landlord liability stuff will apply.. Gas Safety certificates, furniture should have fire proof labels,  all that boring stuff. 

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3 hours ago, PeterW said:

Top result !

Yup. They wavered at first with the umms and ahhs, I dropped some build hub recently inherited 'terminology' on them and next thing you know, it's chips and gravy. 

Thats how we roll. 

"Free boilers for everyone *"

 

 

 

* you must be accompanied by both sets of living great grandparents to qualify for a free boiler *

:D

 

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4 hours ago, Temp said:

furniture should have fire proof labels,

You call it boring stuff, I call it invaluable. 

Didnt know about that so I'll pass that on. Thanks. 

What about the carpets ?( as I'm doing the whole 9 yards, less furniture and soft furnishings )

:)

 

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This says it doesn't apply to carpets.....

 

https://www.google.co.uk/url?sa=t&source=web&rct=j&url=http://www.essex-fire.gov.uk/_img/pics/pdf_1373545479.pdf&ved=0ahUKEwiYip7L8uLPAhXJJcAKHb_wBCgQFgg5MAI&usg=AFQjCNEWWQ9iGE3_tpYgmou90MBtZPgqtw&sig2=uGr1EgfqaxiG3yztz_nhlQ

The main problem was that most people remove the fire rating tags so second hand furniture doesn't usually have them - meaning had to buy new when the regs changed.

 

I'm sure there are websites with all the landlord regs. The last big change was the introduction of the Deposit Protection Scheme.

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