Office-to-resi investigation provides ministers with food for thought, by Jamie Carpenter

The office blocks pictured on the cover of the latest edition of Planning's iPad app, published this morning, are some of the largest in London and England's core cities to be in line for a makeover under controversial eased planning rules that came into force in May 2013.

Proposals to convert the Delta Point office block in Croydon to 404 homes have been given the green light under the relaxed rules, while plans to convert Sheffield's Telephone House to 342 homes and Birmingham's One Hagley Road tower to 259 units have also been approved by planners.

The approvals have been uncovered by a detailed investigation into the impact of the office-to-residential permitted development right, carried out by Planning, which casts light on the impact of the "office-to-resi" phenomenon on housing supply and standards, town centre economies and the property market. 

It suggests that approved prior approval applications in London and the core cities contain nearly 17,500 homes, with approved units in office-to-resi hotspot Croydon numbering more than 2,500. In total, Planning's research found that nearly 2,300 applications were submitted in London and the core cities between May 2013 and July 2014, applicants seeking to use the new rules to convert a variety of different sizes of office buildings to housing.

The numbers sound staggering, particularly given that a government impact assessment published ahead of the introduction of the policy estimated that up to 190 applications per year would come forward under the eased rules across the whole country. Ministers trumpet the policy as a success, saying that it is delivering much-needed new homes and bringing vacant office space back into useful use.

However, the contribution that the office-to-residential permitted development right could make to housing supply must be seen in context. Last week, chief planner Steve Quartermain told a conference that officials estimate that the policy could deliver 32,000 homes nationally. But this figure is equivalent to not even a year's supply for London on mayor Boris Johnson’s current annual target of 42,000, which many commentators believe significantly underestimates the full requirement.

And it remains to be seen whether even this modest contribution will be realised. Experts question whether all approved office-to-residential prior approval applications will be implemented, saying that banks are often unwilling to lend on office conversions allowed under the permitted development right.

Some developers are using prior approval applications as a tool to negotiate reduced affordable housing requirements when seeking conventional planning permission for a conversion or new build development, experts say. In other instances, they suspect that prior approval applications may be being used as a valuation exercise to spruce up the appearance of companies’ balance sheets.

As such, it may be some time before the success of the policy in boosting the supply of new homes becomes clear. Meanwhile, concerns remain over the impact of the policy on town and city centre economies. Local authorities are not able to seek affordable housing contributions from developers bringing forward conversions under the permitted development right and worry that it is creating low-quality accommodation that does not meet local housing needs.

Planning's investigation found evidence that owners have secured approval to convert occupied office buildings to homes under the new rules. The potential loss of office floorspace in one group of six authorities exceeds the floor area of One Canada Square, the London landmark at the centre of Canary Wharf, the analysis found.

With the government having consulted in July on whether the office-to-residential permitted development right should be extended beyond May 2016, when it is due to expire, Planning's findings provide plenty of food for thought.

The findings suggest that the policy does have potential to contribute new homes, albeit with the jury out over how many consented applications will actually be implemented. But the impact of the measure clearly shows that removing planning controls can have unpredictable and sometimes negative impacts.

When ministers decide whether to press ahead with plans to extend the permitted development right beyond May 2016, they must ensure that they base their decision on hard evidence and not be swayed by an ideological desire for deregulation.

Jamie Carpenter, deputy editor, Planning jamie.carpenter@haymarket.com

A further extended report with comprehensive application and appeal analysis as well as an office-to-residential toolkit for local authorities and consultants will soon be released by DCS COMPASS Online and Planning magazine. To register your interest please email dcs@haymarket.com.


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