Can I Sleep at the Office?
Dark mornings and evenings, stressed out families – no wonder people ask us if they can just move into the workplace instead of going home!
Or maybe with the price of residential property topping out at £19,439 per m2 in Kensington & Chelsea (source: Office of National Statistics website 20.11.18) and the rise of ‘flexible work-space’, they’re tempted to save a few pounds.
Is this really feasible? Here are a few things to take into consideration:
1. Leasehold restrictions
Most commercial properties are occupied under a lease from the owner. Either that or by an under-lease (or sub-under-lease) which is when there are two or more Landlords to deal with.
It’s quite normal for the lease to contain a number of clauses which restrict use. These can be very clear, such as a covenant ‘not to use the Premises for residential purposes’.
Less obvious are covenants that state not to do anything which isn’t authorized by planning law or which might invalidate the Landlord’s insurance.
Breaching the terms of a commercial lease could lead to sanctions including forfeiture (termination by the Landlord).
2. Freehold covenants
Whether or not the property is held under a lease, there may be covenants which attach to the freehold for the benefit of any neighbouring properties.
These could directly bind the property owner. They can bind a tenant too if (as is usual) the tenant has agreed to abide by the freehold covenants.
Such covenants often specify the use to which a property can be put although it’s more common for residential properties to be prohibited from commercial use, than vice versa.
3. Planning use restrictions
Planning permission is often required to make physical changes to a property but in addition, planning law deals with ‘Use Classes’ as well.
A property which is authorized for a particular use (e.g. as a retail shop) can’t be used for residential purposes.
An application for change of use would need to be submitted to the Local Planning Authority. This is a standalone requirement under Planning Law, and quite separate from real estate issues, even if your Landlord is the local Council and the Local Planning Authority is also within the same Council.
4. Employment contract and trespass
If you are not the building owner but are employed to work in commercial premises which you’re eyeing up as potential dwelling space; there are a whole host of other legal issues outside commercial property law.
These include possible breach of the terms of your employment contract (which may be a verbal agreement only) and even trespass.
5. Buildings and contents insurance
Whether you own the building or are a tenant, using the property for residential purposes, even for a brief time, is likely to invalidate the terms of the existing buildings and contents insurance.
It is quite normal to find a clause in the insurance policy which forbids residential use. The risk would then be that if any loss is suffered, the insurers would refuse to pay out.
6. Mortgage terms and conditions
Finally, if there is a mortgage then it is likely that using commercial premises for residential purposes would breach the terms of the mortgage.
This puts the lender in a position where they could take remedial action including potentially foreclosing on the loan and/or re-possessing the property.
Bad idea?
If you’re facing difficulties, then moving into the workplace is not the solution!
We can advise on matrimonial issues, commercial property disputes, employer/employee disputes, and home buying.
However, if you want to convert a disused commercial property into a unique and characterful residence, our commercial property team can hold your hand through the process. From finding the perfect property through to moving in to a genuine home.