New rules allowing the conversion of office blocks to residential use without the need for planning permission have been met with hostility from most London borough councils.

According to research by CBRE, 30 London boroughs have applied for an exemption from the Government’s rule that will allow the conversion of office buildings to homes.

Redbridge, Bexley and Barking & Dagenham are the only councils not to apply.

However, there is a growing fear that a significant number of the authorities applying will be refused exemption.

The Department for Communities and Local Government (DCLG) is proposing to bring in new permitted development rights that would allow developers to convert commercial buildings to residential use without requiring planning permission.

On 24th January 2013, the Government announced that it will introduce new regulations to amend the permitted development rule, to allow a change of use from office (B1a) to residential (C3) use without the need for planning permission.

The Government believes that the loss of commercial premises will be outweighed by the economic benefits gained from building new housing units (i.e. additional construction output and more jobs.)

Although it should be noted that any associated physical development that would have previously required planning permission will still require permission and there will be a prior approval process to cover significant impacts on transport and highways, development in areas of high flood risk, land contamination and safety hazard zones.

Exemption

Local authorities were able to apply for an exemption to this new permitted development (a deadline was set for 22nd February 2013) for part or all of their localities, but it will only be granted in “exceptional circumstances”.

The grounds for applying for an exemption are that the permitted development right would:

1. Result in the loss of a nationally significant area of economic activity; and
2. Cause substantial adverse consequences at the local authority level, which are not offset by the positive benefits the new rights would bring.

The new rights will not apply to the City of London. This is after significant concerns and lobbying by the Corporation of London in recognition of its status as the leading financial and business district in the UK and Europe.

Extending the rights

The new permitted development right will apply for three years, after which it will be reviewed.

The Government has said that it will assess the effectiveness of the changes towards the end of the initial three year period; it will then decide whether to extend the rights for a further set period or, perhaps, indefinitely.

Commenting on the new rule, James Bloom, CEO of Regentsmead, said: “The change will be broadly welcomed by developers, although some developers who have non-office sites already earmarked for residential redevelopment may not welcome new competing developments coming on to the market in their localities.

“Landowners and investors should review their property portfolios and assess whether they could make better returns by converting some of their office assets to residential property. Property owners should be aware however that councils are already using the exemption rules such as additional traffic flow to refuse an automatic change of use so it is not as straightforward as it seems.”

The Government’s intention is that this new scheme will make the best use of developed sites by allowing existing buildings to be quickly brought back into productive use, without the hindrance of the perceived cost of the planning system.

However, there is scepticism surrounding the measures which may lead to the number of office spaces decreasing, office rental prices rising and office tenants being in a less secure position in light of owners having less red tape to be able to change their premises to residential use.

DCLG

The DCLG is now assessing the bids for exemption ahead of the new rules coming into force in the spring.

A spokesman for the department said: "As with any informal or formal consultation, we are now considering the responses we have received. We will carefully analyse the arguments put forward, and we will make a statement in due course."

The change is expected to be made in April 2013 and a list of the exempted areas will also be published in Spring.