Government plans threaten London's supply of office space, report says

Out-Law News | 03 Sep 2014 | 5:17 pm | 1 min. read

UK government plans to extend office-to-residential permitted development rights beyond 2016 and remove exemptions granted to certain areas may lead to the loss of "millions of square feet of offices" in London, according to a report in the Financial Times .

The UK government introduced a right to convert offices into homes without applying for planning permission for a three year period in May 2013. Areas such as London's Central Activities Zone and the Manchester City Centre Core were granted exemptions from this temporary permitted development right in order to protect jobs and businesses. However, under new proposals currently under consultation, the government now proposes that the right would be extended beyond 2016 and that the exemptions granted would no longer apply.

According to the Financial Times report, local authorities in parts of London that currently enjoy exemptions are concerned that the high values of residential property in the capital will encourage the damaging large-scale conversion of office space to homes if the exemptions are lifted.

Robert Davis, deputy leader of Westminster Council said that the "loss of office floor space is now a serious issue", according to the report. Research from estate agent Colliers reportedly showed that Westminster, the central parts of which are currently exempt from the permitted development right, had nevertheless lost 800,000 sq ft of offices since the rules were introduced, with a further 1.8m sq ft of conversions already planned. Vacancy rates in the West End were consequently at a 13-year low, the research showed, with office rents having "hit their pre-2007 highs once more".

A spokesman for the borough of Kensington and Chelsea, which is currently fully exempt from the conversion right, told the Financial Times: "The value of residential property here means the pressure to change to residential use is enormous. It is nonsensical to change the policy suddenly after such a short space of time. We would lose a very large amount of business floor space and many thousands of jobs."

Islington Council, which is seeking a partial exemption from the right, having lost 484,000 sq ft of office space since its introduction, raised concerns about the effect of the loss of offices on the capital's economy. "There are growing concerns that this policy is slowing economic growth in London by reducing the supply of available office space," said the Council's executive member for housing and development James Murray, according to the report.

The government's technical consultation on its planning reforms is open until 26 September.