Member Article

Office-to-residential plans to go ahead

The Government has introduced permitted development rights to convert offices to homes without planning permission.

Secretary of State for Communities and Local Government, Eric Pickles, made the announcement that the proposals would go ahead.

In April 2011, a consultation sought views on introducing permitted development rights for change, and the measures are intended to build on the policy set out in the National Planning Policy Framework.

Local planning authorities will be given the opportunity to seek local exemption where there is justified economic grounds.

Mr Pickles said exemption would only be granted in “exceptional circumstances” where local authorities could demonstrate clearly that introduction of the rights impact the local economy, or cause the loss of a nationally significant area of economic activity.

Gregor Wallace, West End Investment Director at BNP Paribas Real Estate, said: “Some councils have already made their intentions public to stop super big flats for overseas investors, so it will be interesting to see if they try to opt out. However, we believe it’s a well needed reform to boost UK cities with redundant buildings sitting empty. Although, I am not sure allowing temporary uses will aide Central London. This is probably aimed more at tertiary / secondary areas.

“Investor and developers have an insatiable appetite for core central London property and residential seems to be able to do no wrong. Not least Far Eastern and Middle Eastern investors feel confident and safe buying or developing here because many of them are now a second generation of family investing in the UK following their parents from the 1970s.

“If not, then they know a family friend that did. Residential capital values in the core are still outstripping office values by a considerable amount, in some instances in Mayfair, being more than 100% higher price per square foot.

“With legal requirements and European regulations such as EPC (energy efficiency), Disability / Equality act and in general more companies seeking modern space, it’s hard to argue why more old period offices should not be converted back to residential use.”

Ian Fletcher, director of policy at the British Property Federation, said: “Given our acute shortage of homes this is an extremely welcome step.

“Office to residential conversions won’t work for all buildings, or in every area, but any trip through our suburbs soon exposes redundant office space that with the best will in the world is never going to be brought back into commercial use.

“Such conversions will be good for those seeking homes, the wider community and local authorities, who will gain from the New Homes Bonus and council tax receipts that occupation generates.

“However, will need to see further detail on how ‘local exceptions’ schemes will work. Any exemptions should be few and far between, and this aspect will need to be tightly drawn and policed if it is not to undermine the overall policy objective.”

North East lettings agent, Ajay Jagota, suggested that reduced credit flows will hamper developers who might want to take advantage of the plans.

He said: “The lack of credit for developers as well as home buyers makes it very difficult for this to have any impact.

“The developer can purchase land/commercial/office easily as there is an abundance of stock (very reasonably priced). The problem lies in obtaining the finance to purchase the land/commercial/office because the finance houses are aware that there are not the buyers in the market to purchase the end product (a home) again due to the reluctance from them to lend on property.

“It will take a while yet for the credit to flow and the housing market to move. I suggest it will be Europe America and even Asia that finally determine our housing market as when these economies start to recover the credit will ease up.”

This was posted in Bdaily's Members' News section by Tom Keighley .