Strategy
Commercial to residential conversion
The short version: in England you can turn most shops, offices and other Class E buildings into homes without full planning permission, using the Class MA permitted development right. The building must have been in Class E use for two years. You need the council’s prior approval on issues such as flooding, noise and natural light, at £260 per home, and every flat must meet national space standards. Building regulations, VAT and stamp duty rules all still apply.
Does the building qualify?
- Use: in Class E (commercial, business and service) for a continuous period of at least two years before you apply.
- No vacancy or size limits: both were removed on 5 March 2024. The building can be occupied and any size.
- Excluded: listed buildings and their grounds, scheduled monuments, National Parks, National Landscapes, the Broads, World Heritage Sites, SSSIs, safety hazard and military explosives areas, and land under an agricultural tenancy unless both sides agree.
- Article 4: a council can remove Class MA rights in an area with an Article 4 direction, and then you need full planning permission. Check with the council before you buy.
Prior approval
You apply to the council with floor plans showing each home’s size, room dimensions and window positions. The council can only assess these matters:
- Transport, especially safe access to the site
- Contamination
- Flooding
- Noise from nearby commercial premises
- Natural light in every habitable room
- In a conservation area, the effect of losing a ground-floor commercial use
- Introducing homes into an area important for industry, storage or distribution
- Losing a registered nursery or NHS health centre
- Fire safety, for two or more homes in a building 18 m or more high or with 7 or more storeys
The fee is £260 per new home from 1 April 2026; it rises with inflation each April. The council has 56 days to decide. Once approved, you have three years to complete the conversion.
Space standards
Every home created under permitted development must meet the Nationally Described Space Standard, and nothing under 37 m² is allowed. Natural light in all habitable rooms is also a prior approval test. The main minimum floor areas for single-storey flats:
| Flat | Minimum internal floor area |
|---|---|
| 1 bed, 1 person | 39 m² (37 m² with a shower room instead of a bathroom) |
| 1 bed, 2 people | 50 m² |
| 2 bed, 3 people | 61 m² |
| 2 bed, 4 people | 70 m² |
| 3 bed, 4 people | 74 m² |
| 3 bed, 5 people | 86 m² |
Single bedrooms need at least 7.5 m², doubles 11.5 m², and ceilings at least 2.3 m high over three-quarters of the floor area.
Building regulations
Turning a building into homes is a material change of use, so building regulations apply in full: fire safety, sound insulation between flats, ventilation, energy, drainage and electrical safety among others. Use the council’s building control or a registered building control approver. For a block of flats with shared areas, you must submit full plans rather than a building notice. Buildings of 18 m or 7 storeys with two or more homes need the Building Safety Regulator’s approval before work starts.
VAT
- Works at 5%: building work and materials for converting a non-residential building into homes can qualify for the reduced rate (HMRC VAT Notice 708, section 7).
- Zero-rated first sale: the developer’s first sale, or a lease over 21 years, of a home converted from a building that was never lived in, or not for ten years, can be zero-rated (section 5). That lets the developer recover VAT on costs.
Stamp duty: the number most people miss
A commercial building bought before any conversion work starts is normally charged at non-residential rates: 0% up to £150,000, 2% to £250,000 and 5% above. On a £300,000 building that is £4,500, against £20,000 on a £300,000 home at the residential rate for investors. HMRC decides on the facts, and if adaptation for living in has already started when you complete, residential rates may apply, so take advice before you exchange. Residential stamp duty calculator.
Other costs
- Community Infrastructure Levy: can apply to permitted development where the council charges it, and you must submit a notice before starting. Floorspace in lawful use for six continuous months in the last three years can usually be deducted.
- Council tax and business rates: the new homes are banded for council tax; tell the Valuation Office about the change on the business rates side.
- Utilities: new supplies and meters for each home can take months to arrange.
Frequently asked questions
What is Class MA?
A permitted development right in England that lets you change a building from Class E (shops, offices, cafés, gyms, clinics and similar) to homes without a full planning application. You still need prior approval from the council on a set list of issues.
Does the building have to be empty?
No. Since 5 March 2024 there is no vacancy requirement and no floorspace limit. The building must have been in Class E use for a continuous two years before you apply.
How long does prior approval take?
The council has 56 days. If it has not decided by then, you can go ahead in line with your application, unless you agreed a longer period in writing.
Can I convert a listed building or one in a National Park under Class MA?
No. Listed buildings, scheduled monuments, National Parks, National Landscapes (AONBs), the Broads, World Heritage Sites and SSSIs are excluded. Conservation areas are not excluded, but ground-floor changes there get extra scrutiny.
Do I pay VAT on conversion works?
Building work and materials for converting a non-residential building into homes can qualify for the reduced 5% rate under HMRC VAT Notice 708. The first sale or long lease of the finished homes by the developer can be zero-rated. Take VAT advice before you start, as the conditions are strict.
Commercial to residential deals on DealSold
Add commercial to residential to your brief on DealSold and matching deals come to you. Each deal shows its figures with where they came from, and the sourcer can answer questions about planning in the deal room.
Capital at risk. Property values and rents can go down as well as up.
How we made this guide
Written by the DealSold team from the Class MA legislation, the Nationally Described Space Standard, the Building Regulations 2010, VAT Notice 708, GOV.UK’s non-residential stamp duty rates and the government’s 2026 planning fee schedule, all checked on the date shown. England only. General information, not planning, tax or legal advice.