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Page: Differences Between Commercial and Residential Buildings

Know These Top Differences Between
Commercial and Residential Buildings

These 9 property aspects determine if your property is
commercial or residential, affecting your bills and taxes


There are big differences between residential and commercial buildings,
not only in building costs, but bills, rates and taxes in the long term.

The difference between residential and commercial property is commonly known but there are many technical details that should also be known. The terms residential and commercial come from residence and commerce, respectively. Therefore, their difference is obvious to all:

Residence refers to the residential space that is used for living purposes;

Commercial refers to a space that is used to gain benefits or to carry out activities that are different from the simple purpose of life.

However, there are many more subtle differences that people are not aware of, and this differentiation is used by authorities for different tax assessments, whether it is stamp duty, electricity rates, or any other utility bill. This blog tries to highlight the difference between residential and commercial properties from the point of view of owners, who use people and occupants who see these properties differently.

Bank Policies & Interest Rates

It is worthwhile to note that even banks differentiate between them and the different rates of interest on the mortgages of these two types of properties. Therefore, think twice before deciding to buy a property. The interest rate for purchasing a residential property is lower than the rate for a commercial property. This is because banks realize that commercial property will earn for the owner, while the residential property will also earn on its own, but gradually, as the value of the property increases.

Living Conditions

The most spectacular difference between a residential and commercial property is that a residential property is one that is used solely for living such as bungalows, apartments, condos, and cooperatives. Thus, a property where a person lives is called a residential property. On the other hand, industries, shopping malls, office spaces, etc. are eligible under commercial properties. Thus, the person works in commercial property.

Government Policies & Tax Rates

For investment purposes, one must decide in advance whether he is buying a property to build a house or to develop retail space. If the decision is to develop shops or offices, the property he buys must be commercial property because the authorities have designated the property as commercial or residential. Once purchased, it is almost impossible to make any changes in its use. It is important to know the difference between the two types of properties before deciding to invest. The two assets are taxed separately; officers charge the owner more for registration and stamp duty, as they feel that commercial property brings higher returns on investment.

For Getting a Loan

Banks consider commercial properties to be riskier than residential properties, considering that the owner of a residential property can be made to easily spend the loan amount, which is not the case with commercial property buyers. Loans for commercial property are therefore short-term and bear higher rates of interest than residential properties that are often mortgaged at very low-interest rates for periods up to 30 years.

Cost & Resale Value

Residential property is usually cheaper than commercial property, although there are exceptions, such as highly valued, luxury private properties. You can buy a residential property at half rates as compared to the commercial property. Likewise, the resale value of the commercial property is generally higher than that of the residential property, especially for a successful enterprise.


As part of your property plans, you have to prepare drafts to be
submitted for approval by your local planning authority.

Design and Construction

../images/red2-Dotted1s.pngResidential buildings – 

Residential construction or residential buildings are more often called houses, garages, and homes. The residential building is constructed by using residential building standards. There so many types of residential structures including:

../images/red2-Dotted1s.pngCommercial buildings – 

Commercial construction is the place people can run their business called a business of building and selling or leasing manufacturer plants, medical centres, retails shopping and standard space for offices. The business varies primarily in the size and scale of operations. Almost all the construction is done by using trusses, metal because of less construction time easy to install and requires durable framework.

Most of the commercial climate controlled storage buildings are constructed by the steel framing. Metal is strong, durable, resilient, and able to construct heavy and large buildings. There so many types of residential structures including:

Codes & Permits

As you know, the commercial building permit application will be processed by a building officer. For the commercial building permit, process documents (Passed approved site plan from development & permits engineering, State Contractor's license) are required, which help you to build the building. Building permits are necessary to protect the health, safety, and welfare of residents. Failure to obtain the required permits is a violation of the law. Make sure that you have determined whether your project is considered commercial before proceeding.

Residential building permits are one of the essential parts of the remodeling or renovation of your residential buildings. All retaining side panels, although of height, supporting a surcharge (load, structure etc.) require a residential building permission.

The entire construction process can't be constructed without proper building permits. Failure to obtain an appropriate license may not only lead to delays, but also substantial fines. You can find the step-by-step guide to getting a building permit for your next residential building project.


Residential housing projects require a lot of planning, investigating
and preparations just to come up with a viable project plan.

Building Project Deadlines

Whenever it comes to residential building, the time taken in it is valuable because time is money. Therefore, the builders should ensure that the project is completed on the required schedule. Residential buildings are quicker to build than other buildings because residential construction takes less time, less costs and has a more systematic workflow.

According to data, 70% of the commercial building owners claim that the biggest reason for poor project performance is under-construction and poor contractor performance. A schedule is created for a commercial building construction project with a timeline created by the project manager. The project is used as a building plan for the construction of the building. A commercial building construction project's schedule is very important and useful because construction projects can break a big plan into smaller, more manageable stages. A good project manager will use the Gantt chart, for better management and scheduling of tasks in the project.

Required Equipment

Most of the commercial building construction needs techno scientifically material and their equipment to perform most of the projects. Large machines, including land moving tools and cranes, are required to build many commercial building designs.

Talk about residential buildings, then special skills are required for their construction. As is often seen, only the most extraordinary residential buildings demand large equipment to be constructed on an industrial scale.


All the useful and necessary differences for residential and commercial buildings have been written in this blog. If I have missed something by mistake, I will address it in my next blog.

As we have seen, the buildings of both residential and commercial have their weaknesses and strengths. Typically, many investors, homeowners, or business owners prefer to invest in residential buildings before venturing into the commercial sector. In conclusion, it is up to homeowners themselves to select which type of buildings suits them considerably based on their popular financial situations and individual goals.

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