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Offices to residential

28th January 2013

Offices to residential

It is expected that Nick Boles, Planning Minister, will shortly be unveiling proposals to streamline the planning process by, once again, seeking to introduce new Permitted Development Rights enabling the change of use of offices into residential without the necessity of obtaining planning consent. His objective is to jump start the supply of housing through the conversion of empty office buildings to overcome the severe housing shortage.

Public consultations on this proposal last year failed to convince the Government to implement such change particularly in face of strong resistance from many Local Planning Authorities. However, current proposals are likely to include provision for Local Councils to opt out upon specific grounds and it would seem that The City of London has already been promised exemption.

Around the Country there are many town centres with a high proportion of empty office buildings and in areas where there are large housing shortages. Investors seeing little prospect of re-letting and the continuing burden of empty rate liability will welcome such conversion opportunities. These measures could kick start the ailing development industry. However, many Local Authorities, concerned upon loss of employment, rates income and loss of planning control will strongly object.

Whilst in most provincial towns and cities this radical planning initiative could positively help to rebalance supply and demand for both the office and residential sectors, it could result in rather a different outcome in Central London and in many of the London Boroughs. In many of these locations the capital value per sq ft of residential is significantly higher than for offices and unrestrained conversions could result in an undersupply of offices further driving up rents. We await publication of the details but it is no secret that Nick Boles who is appalled by the Nation’s housing shortage will be seeking radical solutions.

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.


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