Can You Change the Use of a Commercial Property After You Buy It?
Quick Answer
Yes, sometimes. In Victoria, whether you can change the use of a commercial property depends on the property’s planning scheme, zone, overlays, existing approvals, the proposed use and any conditions that apply. A use may be allowed without a planning permit, may require a permit or may be prohibited.
There is also a separate building question. Even if the planning position works, changing the use may require building approval or works to make the premises suitable for the new use.
The more important question is not “Can I change the use after I buy it?”
It is:
“Can I establish before I buy that this property can legally and practically do what my business needs it to do?”
The Real Problem
This is an easy assumption to make when buying commercial property.
You find a building that looks right.
The location works.
The floor area is right.
The price appears reasonable.
Then you think:
“If we need to change the use, we’ll deal with that after settlement.”
That can be a very expensive approach.
The planning system is concerned with what activities can occur on particular land. Your business is concerned with whether the property can support the way you actually operate.
Those two questions overlap, but they are not identical.
For example, “warehouse”, “showroom”, “office”, “retail” or “industrial” are broad descriptions. The relevant planning use may be more specific, and the answer can change depending on the activities taking place at the property.
If the property’s value to your business depends on a future use, that use is part of your acquisition due diligence.
Not a post-settlement project.
1. Can the property legally be used for what you want?
The first step is to define the proposed use precisely.
Ask what the business will actually do on the site.
Will there be:
- customers visiting?
- manufacturing?
- storage or distribution?
- heavy vehicle movements?
- loading and unloading?
- outdoor storage?
- food preparation?
- late-night operations?
- significant staff numbers?
- machinery?
- hazardous materials?
- increased signage?
- additional parking requirements?
- alterations to the building?
These details can affect the planning assessment.
Victoria’s planning schemes generally divide land uses into three categories:
- Section 1: permit not required
- Section 2: permit required
- Section 3: prohibited
A Section 2 use requires a permit, but that does not mean approval is guaranteed. A Section 3 use is prohibited under the relevant provision.
That distinction is critical.
If the proposed use is prohibited, owning the property does not give you a right to operate that business there.
And if the use requires a permit, you are taking on planning risk if you buy the property before understanding the prospects and conditions of that approval.
Start with the property, not the agent’s description
A useful first step is to obtain the property’s planning information through VicPlan, which provides access to the applicable planning zones, overlays and relevant planning provisions.
But don’t stop at the zone name.
Review the actual provisions applying to the property, including:
- the zone and its schedule
- overlays
- particular provisions
- existing planning permits
- permit conditions
- endorsed plans
- relevant local policies
- car parking requirements
- restrictions affecting the proposed use
The question is not whether the property is “commercial”.
The question is whether your specific use is acceptable at that particular address.
2. What if the property is already being used for something similar?
This is where buyers need to be careful.
You may inspect a property where another business has operated for years and assume you can simply take over the same activity or expand it.
Sometimes that will be straightforward.
Sometimes it will not.
Victoria’s planning system recognises existing use rights in certain circumstances. These can arise where a use was lawfully established before a planning scheme or relevant amendment restricted or prohibited it. The planning scheme also provides a pathway based on evidence of continuous use for 15 years.
But an existing use right is not a blanket right to do whatever you want with the property.
Existing use rights relate to the specific use that was lawfully established. They do not automatically authorise new development or an unrelated use.
That means this statement:
“They’ve been doing it there for years.”
is not enough.
Find out:
- what the lawful use actually is
- whether there is a planning permit
- what conditions apply
- whether the use has continued
- whether the proposed use is genuinely the same
- whether your intended expansion changes the planning position
For older properties, historical planning information can also matter.
This is one reason a buyer should investigate the property’s planning history rather than relying on the current occupant’s description of what happens there.
3. Does planning approval mean you can start operating?
No.
This is another common assumption.
A planning permit and a building permit deal with different issues. Planning approval concerns the planning use or development of the land. Building requirements concern the building itself and whether it is suitable for the proposed use and works.
A change of use can therefore create a second investigation.
Depending on the property and proposed use, you may need to consider:
- building classification
- fire safety
- exits and paths of travel
- accessibility
- sanitary facilities
- structural changes
- mechanical services
- electrical infrastructure
- essential safety measures
- occupancy documentation
- other building requirements
The practical consequence is important.
You might establish that:
“Planning approval is possible.”
But the more useful commercial question is:
“What will it cost to make the building capable of supporting the approved use?”
A property that requires substantial building work is a very different acquisition from one that can be occupied with minimal changes.
4. Could parking and site constraints make the change uneconomic?
Yes.
This is one of the areas buyers can overlook when they focus on whether the use is technically permitted.
Victoria’s current car parking provisions can apply to a new use and, depending on the circumstances, changes to an existing use or floor area.
The site’s practical characteristics matter too.
Consider:
- number of existing parking spaces
- vehicle access
- loading arrangements
- turning areas
- customer movements
- pedestrian access
- waste collection
- delivery frequency
- outdoor storage
- operating hours
- site layout
A change of use can work on paper but fail operationally.
A business might establish that a planning pathway exists but discover that the site cannot efficiently accommodate the vehicles, customers or deliveries that the business depends upon.
That is why planning feasibility is not the same as business suitability.
The property has to work physically as well as legally.
5. What about environmental issues?
A proposed change of use can also make the site’s environmental history more important.
EPA Victoria recommends researching previous land uses to identify whether a site could be contaminated, particularly where land has been used for activities such as industry, mining or storing chemicals.
This is particularly relevant where a buyer is proposing to change the character of a site.
Consider a property with a history involving:
- fuel storage
- automotive activity
- manufacturing
- chemical storage
- waste
- intensive industrial activity
If the proposed use involves redevelopment or a more sensitive use, environmental investigations may become an important part of the planning process.
The commercial lesson is straightforward:
Don’t discover environmental constraints after you’ve bought the property because you assumed the previous use was irrelevant.
6. What should you investigate before buying?
If the intended use is central to the acquisition, the investigation should happen before you become committed.
The level of work will depend on the risk.
For a relatively straightforward proposed use, you may need to establish the applicable zone, use definition, permit requirements and existing approvals.
For a more complex acquisition, you may need:
- A VicPlan planning property report
- Planning advice on the proposed use
- A review of existing permits and endorsed plans
- Historical planning research where relevant
- Building advice
- Parking and access assessment
- Environmental due diligence
- Advice on any specific council requirements
If council feedback is important to the decision, consider obtaining appropriate pre-application or planning advice before committing.
And if the property is being purchased specifically because you believe a future use or redevelopment is possible, consider whether the contract should contain appropriate conditions or protections.
This is particularly important for commercial property because the standard residential cooling-off protection does not generally apply to properties used mainly for commercial or industrial purposes.
There may also be a tax consequence
There is another issue that is easy to miss.
Victoria’s Commercial and Industrial Property Tax (CIPT) regime has its own rules around changes in use.
For properties that have entered the CIPT regime, changing between a qualifying commercial or industrial use and a non-qualifying use can create notification obligations and, in certain circumstances, change-of-use duty consequences.
This is particularly relevant where a buyer is considering changing a commercial or industrial property to a different category of use.
It is another reason not to treat “change of use” as purely a planning question.
Challenge the common assumption: buying the property does not buy you the use
This is the point worth remembering.
A buyer can become focused on the physical asset:
“It’s the perfect building.”
But the business is not buying the building for its own sake.
It is buying the building because it needs the property to perform a particular job.
If that job depends on an approval that has not been established, the buyer may be paying a substantial amount for an assumption.
That is very different from buying a property where the intended use has already been demonstrated.
Sometimes the best commercial decision is to do more investigation.
Sometimes it is to negotiate contractual protection.
And sometimes it is to walk away.
The right property is not necessarily the easiest property to buy.
FAQs
Can I change the use of a commercial property without a planning permit in Victoria?
Sometimes. The answer depends on the property’s zone, overlays, the specific land use and any applicable conditions. Victorian planning schemes classify uses as permit-not-required, permit-required or prohibited, so the specific property and proposed use need to be checked.
Do I need both a planning permit and a building permit?
Not necessarily both, but they address different issues and one does not automatically replace the other. A change of use may require planning approval, building approval, or both depending on the circumstances and the work involved.
Can I rely on the previous owner’s existing use?
Not automatically. Existing use rights can exist in Victoria, but they are tied to the particular circumstances and established use. You should verify the planning history and lawful use rather than assuming that a previous business gives you unrestricted rights.
Can changing the use affect car parking?
Yes. Victoria’s current car parking provisions can apply to a new use, with requirements depending on the use, location and applicable planning controls. A change of use can therefore create a parking issue even where the existing business has operated with the current number of spaces.
Should I get planning advice before buying?
If the intended use is central to the purchase, it is sensible to investigate the planning position before committing. The more dependent the acquisition is on a particular future use, development or approval, the more important it becomes to establish the feasibility early.
The bottom line
Yes, you can sometimes change the use of a commercial property after buying it.
But “sometimes” is not a sufficient basis for a major commercial property decision.
If the intended use is the reason you want the property, test that use before you buy.
Check the zone and overlays. Understand the actual land-use definition. Review existing permits and any claimed existing use rights. Consider building requirements, parking, access and environmental history. And where relevant, understand whether a change of use could have tax consequences.
Most importantly, don’t confuse owning the property with having the right to use it in the way your business requires.
Property decisions are business decisions.
If the property only works if a future planning outcome goes your way, that risk needs to be understood before you commit.
EXTERNAL SOURCES USED
Victorian Department of Transport and Planning | Planning schemes and existing use rights
https://www.planning.vic.gov.au/guides-and-resources/guides/guide-to-victorias-planning-system/planning-schemes
Victorian Department of Transport and Planning | Using VicPlan
https://www.planning.vic.gov.au/planning-schemes/using-vicplan
Victorian Department of Transport and Planning | How planning scheme provisions work
https://www.planning.vic.gov.au/guides-and-resources/guides/practitioners-guide-to-victorias-planning-schemes/how-provisions-work
Victorian Department of Transport and Planning | Using the car parking provisions
https://www.planning.vic.gov.au/guides-and-resources/guides/planning-practice-notes/using-the-car-parking-provisions
EPA Victoria | Contaminated land and groundwater
https://www.epa.vic.gov.au/contaminated-land-and-groundwater
State Revenue Office Victoria | Changes of use of property
https://www.sro.vic.gov.au/businesses-and-organisations/commercial-and-industrial-property-tax/changes-use-property
Consumer Affairs Victoria | Buying property by private sale
https://www.consumer.vic.gov.au/housing/buying-and-selling-property/buying-property/buying-property-by-private-sale
CLAIMS TO VERIFY
- The current planning scheme and zone for any specific property discussed.
- Whether the intended use is Section 1, Section 2 or Section 3 at the relevant property.
- Whether an existing use right exists and precisely what use it protects.
- Whether a planning permit is required for the proposed use.
- Whether a building permit or other building approval is required.
- Current car parking provisions and any applicable Parking Overlay.
- Any environmental audit or contamination requirements.
- Whether the property has entered the Victorian CIPT regime and whether the proposed change of use could trigger notification or duty consequences.
- Any statement about the buyer’s contractual rights should be checked against the actual contract by the buyer’s Victorian property lawyer.
- Planning and tax rules should be checked again immediately before publication and before being applied to a specific transaction.