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Mixed-use buildings
By Jodi Bernard, PEI REALTOR®, CENTURY 21 Northumberland Realty. Last reviewed .
A shop with apartments above it is two kinds of property under one roof. Each part has its own rules, its own tenants, and its own risks.
Who this suits
Buyers who can manage both business tenants and residential tenants, often on a main street. Some owners occupy the ground floor themselves and rent the apartments.
Two sets of rules
The apartments fall under the Residential Tenancy Act, with PEI’s limits on rent increases. The commercial space falls under its lease and the Landlord and Tenant Act. Property tax can differ too: commercial realty and non-commercial realty have different provincial rates, and the province’s assessment decides how the building is split. GST/HST on the purchase can also be split between the two parts. Ask an accountant.
The building
Older mixed-use buildings often need attention to fire separations between the shop and the homes above, exits, and accessibility. A change in the ground-floor use, such as a shop becoming a restaurant, can trigger code and permit reviews. Ask for fire inspection records and permits for past work.
Questions to ask
Ask these before you add the two incomes together.
- What are the apartment rents and their increase history?
- When do the commercial leases end?
- How is the property assessed for tax?
- What fire and code work has been done, with permits?
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This is educational, not legal, tax, or lending advice. Ask Jodi Bernard about a specific property.