- October 1, 2024
- Posted by: Muhammad Afzaal
- Category: Blogs
Converting residential properties into commercial ones is not a bad idea, as it increases the income potential and boosts property value. However, the process includes multiple financial, legal, and zoning challenges. Here is an exclusive guide for converting residential property into commercial one in Pakistan;
Converting Residential Property into Commercial One in Pakistan
-
Zoning Laws & Permissions
You must head to local authorities for approval to convert a residential property into a commercial property. Depending on the location of your property, you can go to the Lahore Development Authority (LDA), Karachi Development Authority (KDA), or Capital Development Authority (CDA).
The zoning regulations vary from city to city. You need to consult the relevant authority to get your property evaluated if it falls for commercial conversion. You might require a rezoning application if your property is in a strictly residential area.
-
Legal Approvals
The conversion process requires a No Objection Certificate (NOC) from the relevant authorities. The NOC formally indicates that local governing bodies have no objection to converting your residential property into a commercial one. There is no way to avoid NOC; you must pay hefty fines and take legal action in the worst cases.
It is best to hire a legal consultant familiar with the property conversion laws and who can comply with the local ordinance while streamlining the whole conversion process.
-
Structural Modifications
When the legal aspects are done, the next step is structural modification. Commercial properties need to adhere to certain building codes. These codes include parking spaces, fire exits, accessibility for the disabled, etc. Suppose you are turning your home into an office; you must make certain modifications and redesign the property (installing signage and emergency exits) to ensure it meets commercial standards.
Also Read: Banks that provide home loan facilities for Pakistan real estate
-
Tax Considerations & Financial Implications
Commercial conversion will make your property eligible for higher tax rates. In urban prime locations, tax brackets are much higher than those for residential properties. In addition, you will be getting more utility bills due to expensive units. It is best to consult a financial advisor to make an informed decision by calculating the potential ROI before switching.
-
Market Value & Rent Potential
Commercial properties get you more rent than residential properties, specifically in the Pakistani market. Converting a residential property into a warehouse, office, or shop means higher-paying tenants. Also, the location of the property matters a lot. For instance, due to high foot traffic, Saddar, Karachi, or Gulberg properties in Lahore would have greater commercial value.
-
Neighbourhood Impact & Community Concerns
Wrap Up
Successful conversion of residential property into commercial one will give you financial benefits. It will increase the market value of your property and is highly profitable. All you need to do is ensure its compliance with the local regulations, do the necessary structural modifications, and be good to go.