Boris pushes for conversion exemption in Central London

After nearly two years of consultation and reflection the government is now on course to amend planning regulations by classifying the change of use from offices into residential as “permitted development” under the General Permitted Development Order. Communities Secretary, Eric Pickles, recently announced in a written statement to Parliament that “new permitted development rights will allow change of use from B1(a) offices to C3 residential. They will provide badly needed homes for local people and will make a valuable contribution to easing our national housing shortage. By bringing underused offices back into effective use they will also help to create jobs and services industries and regenerate our town centres.” However, Pickles further stated that the new regulations will be subject to a sunset clause limiting the change to three years after which the benefits will be reviewed.

Pickles has written to all planning authorities informing them that they may apply for exemption primarily upon the grounds that the new regulations might result in the loss of a nationally significant area of economic activity or substantial adverse consequences. Applications for exemption had to be submitted by 22nd February 2013.

Boris Johnson, Mayor of London, has responded by seeking exemption within London’s Central Activities Zone which includes the City of London, much of the West End, the commercial area to the north of the Isle of Dogs, the Royal Docks and “Tech City”, an area of East London, upon the grounds that such permitted change of use from offices to residential could undermine the economic prosperity and employment opportunities in these areas.

The government should be commended for this relaxation. Many town centres throughout the country have become blighted by the prevalence of empty office buildings, many with little or no prospect of re-letting as offices. The new regulations could kick-start refurbishment to provide urgently needed housing and to encourage the regeneration of run-down centres. 

However, such permitted development may have a lesser impact in Central London. Boris Johnson will almost certainly win exemption from these provisions for the City and most of the West End. In other London locations the rate of change will depend upon the economics of conversion and the attitude of disempowered borough planning authorities.

Eugene O’Sullivan, of the commercial property agent Morgan Pryce, notes, “It waits to be seen how much this change in regulations may affect London. London, as we know, is a different beast from the rest of the country – which is demonstrated by Boris Johnson’s wide application for exemption across certain parts of the capital. We may well see no particular change in the ratio of commercial/residential space in some areas, and other areas may be transformed because of the new planning legislation.” 

Purpose-built office buildings do not easily convert to residential. It is likely that all services and internal partitioning would need stripping out and external fenestration replaced. Conversion costs may well be close to those of new-build. Authorities fearful of the loss of empty rate income and affordable housing contributions might yet seek to retain some control as their consent will still be required in respect of such detail as external appearance, parking requirements and compliance with local infrastructure requirements.

Thoughtfully drafted regulations should bring all-round benefits. Office rents will stabilise and housing provision increased. Some empty office buildings may be converted for multi-use with mixed-use occupation. Design of new office construction may build in flexible use from inception.

Morgan Pryce is a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.