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Residential property is used for the commercial purpose

Discussion in 'General Investing Discussion' started by evisional, 31st Aug, 2008.

  1. evisional

    evisional Well-Known Member

    23rd Aug, 2007
    I have a residential property in a busy commercial district. Can I rent it out for commercial purpose (i.e. use for medical clinic or home office)? Do I have to apply with Council to convert residential zone into business zone?

    The property currently have more than 80% mortgage. If I convert it into business zone, will this effect the mortgage LVR?

    Thanks a lot.
  2. D&K

    D&K Well-Known Member

    14th Nov, 2005
    You'll need to find out if it is actually in a commercial zone, or just nearby, or the extent of commercial or community activities allowed within a residential zone. I have no idea of where you are located, but often the local government website will have streen maps showing the zones.

    Even if you are in a commercial zone you may need to submit an application to change the purpose of the property. This is normally described in the planning codes, for example, you may need to apply for a "material change of use" or something similar (depending on what its called in that state - is it Vic?). Obviously, if you are in a commercial zone, this should be pretty easy to get approved.

    Approval of a change in use could increase the value of the property and therefore the LVR. If, however, it's always been in the commercial zone then that knowledge would have been built into the price all along. In theory the difference in price would equate to the cost and hassle of getting the change of use approved.

    HTH, Dave