The UK suffers from an acute housing shortage, and this has led to prices outpacing incomes in nearly every year since the early 1990s. Most government initiatives to address this problem, however, have merely resulted in greater demand for properties. In fact, the only way to tackle the issue properly is to increase supply.
But our planning system has become overly bureaucratic, uncertain and expensive to navigate. With the planning system in its current state, it is simply not possible to create the quantum of new homes needed. Moreover, it does very little to militate against the traditional housebuilders’ desire to build their standardised boxes on our green field land to the detriment of the environment. The UK needs the speedy development of cost effective sustainable housing.
The introduction, in May 2013, of Permitted Development Rights (PDR) for the automatic conversion of offices to residential use during the three years to May 2016 was a long overdue and necessary reform to the planning process. It served to allow the conversion of redundant offices across the UK into one and two bedroom flats, typically suited to first time buyers and affordable housing. Moreover, it achieved this without damaging our green fields.
At the time of the introduction of PDR, there was some 43m sq ft of vacant office space in the UK, and 11.7m sq ft of this was obsolete. While technology in the workplace and working habits have changed dramatically over the last 30 years, local authorities have been slow to allow the conversion of redundant space for residential purposes. PDR forced local authorities to permit this conversion. They have not enjoyed their position being usurped, but it was absolutely necessary to do so.
In the two years since PDR was introduced, my company First Property Group has gained consent for the conversion of 360,000 sq ft of office space into 665 flats across the UK, worth a total of some £100m – a significant contribution in such a short time frame. Around a third of these flats were sold to Housing Associations.
Some critics have claimed that PDR has resulted in businesses being turfed out of otherwise perfectly viable office buildings. This is simply not true. Given the short period during which PDR was applicable, office buildings had to be more or less vacant at the time of purchase to allow their conversion to take place. Around 95 per cent of the office space in buildings that we have converted was vacant. None of this space was viable as offices – if it had been, it would not have been vacant!
With much stronger foundations and supporting structures in place, many of these office buildings were ideal for the rapid creation of one and two bedroom flats; suitable for affordable homes and for the Help to Buy scheme.
Moreover, the removal of redundant office space from the market has reduced over-supply, paving the way for the development of more modern office stock to suit contemporary working practices. This is good for business and good for the economy.
I therefore call on the next government to enact permanent legislation to break the stranglehold of our turgid planning system, and to ensure that brown field sites can successfully be developed into affordable homes.
Ben Habib is chief executive of First Property Group.