What is the difference between residential and non-residential property

Buying an apartment and converting it to non-residential use can be a profitable venture. Residential real estate is cheaper than non-residential premises, which allows you to earn good money on further sale or lease. But it is important to understand all the nuances and determine whether it is possible to change the status of real estate.

What is non-residential property?

Non-residential premises is an object intended not for residential use, but for commercial purposes. Such real estate is not suitable for propiska, unlike an apartment, where it is allowed to register temporarily or permanently.

What can be classified as non-residential:

• offices and administrative buildings;

• hotels, resorts, tourist centers, restaurants and cafes;

• shopping centers, stores, supermarkets, indoor markets;

• underground and surface parking lots, garages;

• industrial buildings, warehouses;

• Utility buildings (workshops, boiler houses, boiler rooms, temporary buildings).

To understand the difference between commercial real estate and residential, you should focus on three main parameters: purpose, utility rates, and property value.

When it comes to purpose, residential property is used for living, not for business. Commercial space is intended to generate income, it is not suitable for human habitation.

Utility tariffs for residential and non-residential real estate differ significantly. It is much more profitable to pay for utilities for owners of apartments rather than offices or warehouses. Utility tariffs for commercial properties are higher, as the latter are used to make money. To save money, non-residential property owners often refuse gas and hot water, if this is possible due to the type of activity.

Another distinctive characteristic is the cost of the real estate object. It costs about 20-30% more to buy a non-residential property than an apartment. That is why there are those who want to buy residential real estate at a lower price and then change its status to "non-residential".

Is it possible to live in non-residential property?

Non-residential premises are considered to be an object that cannot be used for human habitation. If the owner wants to register in such premises, he/she needs to first re-register the property as residential. According to the current legislation of Ukraine, if a violation is detected, a person residing in non-residential premises must pay a fine.

Is it possible to convert non-residential to residential?

It is possible to change the status of a property from non-residential to residential, but it is not easy. The property must meet strict requirements:

• is characterized by high quality construction, does not belong to the real estate of the emergency fund, is not subject to demolition;

• there is an opportunity to connect all necessary communications - sewerage, water supply, electricity, gas supply system;

• the real estate complies with safety rules, does not imply situations dangerous to the life of the residents;

• ceiling height in the room of a suitable height for comfortable living;

• there are no sources of airborne contaminants in the house.

If the premises do not meet the prescribed technical standards, you should not count on approval of the conversion of the object from non-residential to residential.

Is it possible to convert residential to non-residential?

The conversion of residential property into non-residential property is also possible, but there are a number of nuances. Often, reissuance is sought for the further sale or lease of premises for commercial activities. The owner may want to change the status of the apartment in order to conduct business independently, for example, to open a pharmacy, a small store, an office, a beauty salon, a dental office, etc.

It is not necessary to change the status of an apartment in order to conduct business activities in it. Such an option is possible if the dwelling is located in a building which is not included in the lists of dilapidated buildings or lists for demolition in the near future. Also a mandatory condition is the registration of the entrepreneur in the apartment where he plans to conduct commercial activities. In addition, local residents should not feel discomfort from the business of another person.

The option of conducting commercial activity in an apartment without re-registering it is advantageous. An entrepreneur does not have to pay for utilities at inflated rates. And yet not all businessmen refuse to transfer the residential fund to non-residential for the sake of favorable tariffs. They focus on another benefit - the value of real estate increases significantly when an apartment becomes non-residential premises.

What conditions a property must meet in order to be converted to non-residential use:

• placed on the basement or first floor of the building (apartments above the 3rd floor cannot be converted into a workshop or studio);

• if the object is located above the 1st floor, the category of all premises under it is changed to non-residential;

• no one is registered in the apartment, i.e. the owner must sign out;

• no industrial establishment, public restroom, funeral home, recycling center, consumer service facility using flammable or explosive substances, establishment that pollutes the air or area and creates excessive noise or radiation will be opened on the premises;

• If the area of the object exceeds 100 m², it has a second entrance from the street;

• all conditions for engineering communications are provided;

• performed alterations are legalized in the relevant authorities.

Separately, it should be noted that real estate cannot be reclassified from residential to commercial if it is inhabited by people under a social rent agreement or if the object is considered a cultural heritage.

How to change a residential property to non-residential

To change the status of real estate from residential to non-residential or from non-residential to residential, only the person who has the ownership rights to the object can change it. It is also important that the residential or commercial property is not encumbered in any way (mortgages, loans or other types of debts).

If the object meets all the necessary conditions, preparatory measures have been completed, the owner can apply to the Administrative Services Center in his city and submit a package of documents. What documents will be needed to change the status of real estate:

• copies of documents of ownership of the object certified by a notary;

• a copy of the technical passport of the property;

• written consent of the residents of the building to use the premises as non-residential (when changing the category from residential to non-residential);

• a certificate of registration of the owner at another address and a certificate of absence of registered persons in the premises whose status is being reissued;

• notarized constituent documents (if the owner is a legal entity);

• Design proposals for the remodeling of your home or space from a certified architect.

The owner draws up an application for re-registration of the real estate object into residential or non-residential fund under the terms of the Housing Code of Ukraine. Only the owner of the premises can sign the application.

In general, the procedure for transferring residential premises to the non-residential fund is as follows:

1. Prepare a technical opinion on the possibility of converting the object from residential to non-residential.

2. Obtain pre-project proposals for the improvement of the territory from the department of architecture of the local government body.

3. Provide for the technical possibility of a separate entrance.

4. Prepare the necessary documents from the above list.

5. Submit an application and a package of documents to the Administrative Services Center.

6. Wait for the decision on reissuance (the application is considered within 45 working days). Upon expiration of the specified term, the authorized body must notify the owner of the object about the decision 3 days in advance. The response is sent to the CNAP, where the documents were submitted, to the e-mail address of the applicant or by mail to the specified address.

7. Obtain initial data and technical conditions for the reconstruction of the facility.

8. Obtain a residential to non-residential remodeling project from a certified professional.

9. Send a message about the beginning of construction works through the portal Diya.

10. Carry out reconstruction of the property under author's and technical supervision: arrange a separate entrance and improve the territory.

11. Issue a new technical passport.

12. Register a declaration of readiness of the property for use.

13. Register the title to the non-residential facility.

The whole procedure takes quite a lot of time, as you need to collect documents, get technical plans, think about redevelopment, etc. In addition, you will have to wait a couple of months for a response after submitting an application for a transfer.

In order to avoid difficulties when reorganizing an object from residential to non-residential or vice versa, it is best to seek help from experienced lawyers. The real estate agency "Mayak" has its own legal department. Specialists will tell you whether it is possible to change the category of a particular room, what documents you need to collect and how to properly apply. "Mayak" also has a notary who can certify all the necessary documents, including copies of ownership documents for the object.

If you need to change the category of premises without difficulties and unpleasant surprises, contact the experts of real estate agency "Mayak".