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Office to Residential Conversions - the facts

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Office to Residential conversion is at a 10 year high following changes in May 2013 to the planning laws in England. The changes saw the relaxation of rules surrounding what development would be allowed under the Town and County Planning (General Permitted Development) Order 1995. One of the key changes implemented was that office space could be converted in to residential space, without the need for planning permission. One of the driving factors for the government in introducing this was that it would create regeneration and provide much needed housing.

Whilst the changes which came in to force in May 2013 under the Town and Country Planning (General Permitted Development) (Amendment) (England) Order 2013 has resulted in an increase in the development of offices to residential premises, it has not given Local Council’s free reign in allowing such conversions. If the property is listed or was not used as an office building prior to May 2013, then the development is prohibited under the new rules. Additionally, those wishing to undertake conversions of this nature still have to consult the Local Planning Authority in relation to issues involving flooding, highways and contamination and if external development work is to be carried out on the property, then planning permission still needs to be obtained.

Whilst the relaxation of planning laws has created an influx in applications for developments of this nature, it must be noted that local authorities have had the ability to apply for an exemption to this change in policy, with, prior to July 2014, 17 local authorities being exempt from such developments. The grounds for applying for an exemption are as follows:

  1. The result of converting office space to residential space would result in a loss of a nationally significant area of economic activity; and
  2. It would cause substantial adverse consequences at the Local Authority level, which would not be offset against the positive benefits that the new residential space would bring.

The granting of exemptions on the grounds on the above have not been given lightly however and as a result High Court cases have been bought by various councils, namely Islington, Richmond and Camden, challenging the Secretary of States decision not to grant such exemptions and consequently allowing an increase in the change of office space to residential space.

Whilst the measures that were introduced in May 2013 were only for a temporary 3 year period, the Technical Consultation of Planning July 2014, announced further changes to permitted development rights, mainly to make the development of office space to residential more permanent, allowing the scheme to continue until May 2019. This announcement has seen a further increase in the number of applications, with 88% of applications for office to residential conversion arising as a result of the changes to permitted development rights. London Boroughs, such as Islington, have seen a dramatic increase in the number of applications for such developments; however these applications are not always met with approval. Savills have reported that such developments may not always be the best economical practice for local councils as it will take away much needed office space as well as having an implication on affordable housing schemes.

Whilst the change in policy has led to a dramatic increase in the number of houses available, especially in the inner London Boroughs, it must be kept in mind that not all Councils will met the extension of the scheme with open arms and will still seek to challenge it via the exemption route mentioned above in an attempt to protect the local economy and any other housing schemes they may have in place.

This article was written by Gregor Hamlen, Partner, Real Estate, with assistance from Caroline Mathews, Trainee solicitor.

This guide is for general information and interest only and should not be relied upon as providing specific legal advice.  If you require any further information about the issues raised in this article please contact the author or call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact.