On 30 May 2013, the Government introduced a new Permitted Development Rights Order (“the Order”)* The polemic surrounding the Order’s relaxation of the requirement to obtain planning permission for conversion of office space into residential housing (namely automatic rights to change use from Class B1(a) to Class C3) shows no signs of abating. Further controversy was whipped up in December 2013, which saw Camden reject plans to convert offices in Primrose Hill into luxury flats and a coalition of London Boroughs launched a judicial review in respect of the Order. At the heart of the debate is a tug of war between two laudable aims: the protection of commercial space generating employment versus the growing need for housing supply.
Under the Order, developers are required to submit “prior approval” applications for such conversions, but applications can only technically be rejected on the grounds of flood risk, contamination and disruption to transport. Camden issued 15 reasons for its refusal including potential for parking stress and traffic congestion in the area. The residents’ economic arguments, that the local economy would suffer from loss of business space could not be legally factored into ‘prior approval’ decisions. Albeit, economic arguments are pertinent considerations for the Government. Notably only 17 out of 165 Boroughs have areas exempt from the Order.
It remains to be seen whether the Order will make a notable contribution to increasing housing supply. Despite the controversy, residential developers are rightly beginning to capitalise on the opportunities, hence, ‘office-to-resi’ conversion must be considered carefully.
Square footage in London is worth more in a residential market. According to Nationwide, residential property prices rose in the capital by 9.4% from last year and the trend is forecast to continue. In particular, development potential is evident in offices within period buildings that were once homes and are no longer attractive in a commercial context which demands light, open plan office floorplates.
Residential developers must remember that changes to the external façade of a building, structural alterations (perhaps the addition of extra floorspace or fire escapes) or associated access to the building, will necessitate additional full planning applications. A careful strategy will, therefore, need to be employed to navigate the office-to-residential development hurdles without falling foul of the rules. Building Regulations (notably Part L regulations) are still applicable, for example, so fabric energy efficiency must be achieved. This may require significant and costly internal structural alterations. Similarly, fenestration would need to be provided (residential windows must generally be openable) without altering the external appearance of the property. Developers will have to consider the design life carefully as commercial buildings are usually designed for short-to-medium term leases and conversion to long lease residential use will require a longer design life to ensure marketability of dwellings.
The Order expires on 30 May 2016. It will be interesting to see whether it stimulates noticeable residential development or whether negative economic or social impacts will ensue from a loss of business space and affordable housing. There is no denying that a window of opportunity exists possibly for small or specialist residential developers, who seek to utilise redevelopment potential in existing buildings.