The London Borough of Camden this week refused an application by the owners of Utopia Village in Primrose Hill which requested the transformation of 23 of the business units into 53 luxury flats.
The government changed the General Permitted Development Order (GPDO) on 30 May to allow office-to-residential conversions to take place without the need for planning permission.
Under the new system, applicants submit "prior approval" applications, but councils can only refuse on flood risk, contamination and transport and highways grounds.
However, Camden Council cited the National National Planning Policy Framework (NPPF) in its 15 reasons for refusal of the application.
Its refusal letter said the development "would be likely to contribute unacceptably to parking stress and traffic congestion", woudl cause pressures on local infrastructure and impact on neighbours’ privacy.
Campaigners, including the Gloucester Avenue Residents Group and local councillors, argued that the Utopia Village workshops, in the Primrose Hill conservation area, featured "thriving" small- and medium-sized businesses.
They said the offices provided jobs for up to 250 people and their closure could have a devastating economic impact on the area.
A report on the application for members, published at the end of last month, said that 134 letters of objection were received from residents.
The report had recommended that prior approval be granted pending a legal agreement to mitigate traffic and parking issues.
But Labour ward councillor Lazzaro Pietragnoli said officers revised their decision following concerns raised by members of the development control committee.
He said the new office conversion permitted development rules allowed councils to assess applications using policies in the NPPF as well as considering the three grounds of flood risk, contamination and transport and highways.
Pietragnoli said: "I think it's important that the council turned down this application. It's great it took into account local concerns.
"We can mount some sort of opposition to the permitted development law using the NPPF to assess applications. My instinct is that the applicant will appeal the decision."
Among the celebrity residents objecting, according local reports, was TV presenter Portas who suggested amending the new permitted development rights so they can only apply to offices that have been "actively marketed yet still remain vacant for at least six months".
When the government introduced the new law it argued that only under-used or vacant offices would be affected and the move would revitalise town centres.When applying, office owners Utopia Properties had said it was "committed to providing high-quality residential accommodation by converting the existing buildings".
This week, Camden Council joined three other London boroughs in launching a High Court challenge to overturn the government’s office-to-residential change of use laws.
Pietragnoli revealed that Camden Council was also considering a borough-wide Article 4 direction to exempt it from the new permitted development law.
According to its website, the borough has now received 72 office-to-residential prior approval applications, though eight of these have been withdrawn.