What is commerciality?

Marketability is the definitive transformation of the destination of a property. Find out more about how it works.

I. Purpose and Use

The destination of a property is the reason for which it was built. The destination is defined by the Code de l'Urbanisme and must be indicated in the application for administrative authorization for the property (building permit, prior declaration...). There are 5 possible destinations:

• agricultural and forestry operations
• housing,
• trade and service activities,
• equipment of collective interest and public services,
• other activities in the secondary and tertiary sectors.

Theuse of a property corresponds to its actual use. The use is covered by the Code of Construction and Housing. There are only two categories of use: housing and other premises.

II. Change of destination and use

When a property changes its destination, a request must be made to the town planning department. Depending on the work planned, a building permit or a prior declaration may be required.

When changing the use of a property, only the change of use of residential premises is subject to an authorization to be granted by the City Council, the objective being to ensure the protection of the housing stock in tense urban areas. Thus, no authorization is required to transform offices into housing.

There are three types of change of use:

• Mixed-use change: for people who have a commercial activity in their main residence
• Change of use on a personal basis: issued to a person for the duration of his or her business activity
• Real change of use: permanently transforming the destination of the property.

It is only in the latter case that we speak of commerciality and of a compensation transaction.

It should be noted that in co-ownership, the by-laws detail the destination of the building and may prohibit certain activities. If the planned use of the lot is authorized, the approval of the co-ownership will not be necessary. Otherwise, it will be necessary to obtain the authorization of the co-owners at a general meeting.

III. The compensation mechanism

In certain zones, municipalities with more than 200,000 inhabitants, the authorization of change of use is conditioned to the implementation of a compensation surface. That is to say that in case of transformation of a dwelling into offices, the same surface will have to be transformed into housing.

Offsetting maintains an adequate level of housing by compensating for the loss of one unit with another. This compensation can be done:

• By offering to convert other assets held as compensation.
• By purchasing commerciality from a third party who makes a change of use. It will thus be carried out a transfer of commerciality from one property to another, m² of commerciality are transferred from one property to another.

When compensating, the two surfaces must be of equivalent nature: quality, size, environment, etc...

The commerciality has a market value and allows the owner wishing to transform offices into housing to receive an indemnity that can be interesting depending on the city or district concerned.

The particular case of the Parisian market

In Paris, there are three compensation sectors:

• Binding reinforced compensation area (from 1^er,to 9^ème borough outside 3^ème borough :
  • 2 m² of compensation for 1 m² of transformed surface in the same district
  • or 50% in the district concerned and the balance - if social compensation - in the reinforced compensation area.
• Simple non-binding reinforced compensation area (3^ème, 14 à 18^ème) :
  • 2 m² of compensation for 1 m² of transformed surface in the same district
  • or 1 m² of compensation for 1 m² of transformed surface if social compensation in the reinforced compensation sector.
• Other areas: 1 m² of compensation for 1m² of transformed surface

IV. The steps of the transfer of commerciality

• Search for a suitable compensation room
• Signature of a memorandum of understanding for the transfer of commerciality
• File to the direction of the urbanism of the Town hall
• Study of the file by the Town Hall and visit of the two premises by a sworn agent
• Provisional decision of the Town Hall within two months (subject to obtaining the change of destination of both properties if applicable)
• Issuance of a final agreement from the City Council
• Publication of the final decision at the Land Registry