In 2013, the coalition government introduced new rights allowing office buildings to be converted to residential without the need for full planning permission, as part a raft of reforms to tackle the country’s housing crisis.
Half of all 326 councils applied for exemption for 1,387 areas. But only 33 areas were granted it, with the majority in London areas, including the City, Lambeth and Westminster.
Research released yesterday by the CBRE on behalf of the British Council of Offices (BCO) reveals how office-to-flat conversions have dramatically increased since the reforms were introduced, with the amount of space converted in 2014 almost double the 3.7m sq ft that was converted at the height of the last boom in 2008.
The property advisory firm estimates that between 3,800 and 11,400 homes – an average of 7,600 – would have been created in 2014 as a result of these conversions.
CBRE’s head of UK research, Miles Gibson, said that the change, while positive for the housing market, was curbing the availability of offices at a time when demand for space at a record high.
In London, where office vacancy rates are particularly low, around 2.7m sq ft of office space has already been lost to residential. However, this could rise to 10.4m sq ft if all the approvals go ahead.
“Although there has been much less of an impact outside London, our research shows that some areas are running to stand still on the provision of new office space,” Gibson said.
The so-called permitted development right (PDR) expires in May 2016 and is expected to be replaced by a similar measure.
BCO chief executive Richard Kauntze said: “When, in 2013, the government consulted on the possibility of allowing the conversion of offices to housing without the need to secure planning permission, the BCO stressed the vital need to avoid a free-for-all.
“This is now more important than ever, as the increase in office-to-residential conversions since the introduction of the PDR represents a growing challenge in how to satisfy office demand,” he said.