How to turn office space into residential units? Legal challenges

Given that the pandemic has triggered a recession on the real estate market and that employers have discovered remote work to be an efficient solution, the demand for office buildings will likely decline. Property owners should therefore look for new ways their buildings can be used to improve rentability.

One of the most appealing options is to convert office buildings into residential units. The rules in this regard are provided mainly by Law No. 50/1991, on the authorisation of construction works, as amended.

According to Law No. 50/1991, owners must first obtain a new town planning certificate for their property indicating all the documents needed to change the building's designation.  

As a rule, the conversion of commercial spaces into residential units will require a planning permit. Nevertheless, it may be possible to convert office or commercial space into residential premises even without obtaining a building permit, but only if the construction works do not alter the structure of the building and/or its architectural character. Obviously, if structural partitions are needed, applying for a new building permit will be a must.

Before obtaining the building permit to change the use of a building, the local public authorities may also require the owner to prepare a regional urban plan (PUZ) or a detailed urban plan (PUD), if the new designation of the building is incompatible with that provided by the urban local regulations.

Moreover, the use of a building may be changed by obtaining a new building permit, but without needing to prepare technical documentation if the new use of the building is in line with the local urban regulations set by the applicable PUG or PUZ.

Finally, once conversion works are completed and a reception protocol has been issued, the change of use from commercial to residential must be registered with the Land Book Office, based on a new cadastral documentation drawn up for the building.

Besides the funds required to reconvert an office building into residential spaces, the reconversion may also entail a lengthy bureaucratic process. However, given the change from offline to online office work, reconversion will certainly be a viable alternative in some cases. This new business model will create the need for many additional services, such as construction work, technical and professional services, real estate consultancy, brokerage services and others.

This article was first published in the real estate report "Romania Market Overview 2020 – 2021 Inside -Out", published by Knight Frank.