Properties at the recently completed Bermudiana Beach Residences have been rented out before confirmation that their permitted use may be changed from tourism to residential.

After initial inquiries by The Royal Gazette, a government spokesman said that the planning department agreed that units at the site in Warwick could be occupied according to their existing licence.

The publicly owned South Shore property was devised as a mixed-use hotel-affordable housing complex in 2007.

The housing component was dropped in 2018, when Lieutenant-Colonel David Burch, who was then the public works minister, said the property would be repositioned as a mid-market boutique hotel.

That plan was scrapped last October, when Colonel Burch announced that the 94 hotel suites would be put up for rent as apartments for island residents.

Zane DeSilva, the housing minister, said last week that 29 tenants had moved in and a further ten had signed lease agreements.

However, the premises is still zoned for tourism use, not residential use.

The Department of Planning’s website showed that an application to change eight of the blocks from tourism to residential was submitted on March 24 but that application had still to be approved.

A government spokesman explained: “With the concurrence of the Department of Planning, the units are occupied pursuant to their existing licence.

“Following the consideration of the planning application, it is expected that the classification will be residential.“

A specialist with familiarity of the planning process, who wished to remain anonymous, said that a number of inspections needed to be carried out when a building switches its use, even if the building had passed those inspections before the change of use.

The source, who works in a related industry, said: “From what I can see, the planning revision has not yet been approved.

“The signing of rental or purchase agreements for a property that has not yet received planning permission would not typically constitute a breach of planning regulations.

“Developers and purchasers are free to enter into preconstruction sales agreements in the private sector, so I don't see how this would be any different, but occupying the premises would be a problem

“The property first needs to be approved as a residential development, and a change of use of land is not straightforward. The process is subject to a number of reviews and requirements which would typically take a considerable amount of time for various government departments to consider.”

The source said that once approved as a residential property, fresh building inspections must be carried out to make sure that the building meets construction, health and safety standards.

“An occupancy certificate can only be granted once a property has passed those inspections,” the source said.

It was claimed by the observer: “Occupying a premises without an occupancy certificate is a violation of planning regulations and subject to enforcement and penalties.

“Occupancy also carries with it a number of other important considerations such as insurance liabilities.

“Insurance policies will not be valid for occupants of a property that does not have an occupancy certificate.”

However, a construction industry insider suggested that the change of use was only marginal and did not represent a significant breach.

That source, who also wished to be unnamed, said: “If they were changing from industrial or institutional to residential, I would think there would be an issue, but there are lots of ‘tourism’ properties that rent to longer-term tenants because the use is essentially the same.

“Considering that the property was going to be residential low-cost housing before it was changed to a hotel is also pertinent, I would imagine.”

Last week, Zane DeSilva, the Minister of Housing and Municipalities, defended the Government’s decision to lease the high-rent properties to the private sector at market rates rather than allow more than 300 families in need of affordable housing to move in.

Mr DeSilva said: “This site has had many challenges over the last 15 years. A lot of money has been spent on that property, and the way in which we’re going to continue to fund it is through the EY report that we received that suggested that … that’s what we’re doing.

“I hear you, but this property needs to be fixed in terms of the bleeding it’s been experiencing with regard to financing.

“I think that if we continue on the track that we are with the tenants and the amount of rents that we’re receiving, we will not only be able to maintain the payments on the loans that have been extended but we will also hopefully, at the start of next year, start to receive a surplus.

“We have a way in which we can stop the bleeding. That’s where we’re heading and we’re on a good footing to do that.”

The Royal Gazette forwarded the concerns of the planning source to the Government last week. No response was received by press time last night.