Can an office become a home?

Is the Government's offices to homes plan forward-thinking or folly?

Last week the Government unveiled its new plans to promote regeneration by relaxing the rules around ‘Change of Use’ in the planning system.

The biggest and most controversial of these is the Offices-to-Homes plan, which pretty much does what it says on the tin. It relaxes the planning restrictions around converting office buildings into residential properties. As a result, developers won’t need to seek planning permission. Instead such projects will be a permitted development (in the same way many loft conversions are).

The new rules will be in place for three years, at which point there’ll be a review into whether or not they should continue.

Why now?

The idea isn’t a new one. The Offices to Homes plan was mooted in April 2011, when the Government ran a consultation on the issue. This was also a recommendation in the Mary Portas Review of high streets in late 2011, which called for the Government to ease the rules surrounding Change of Use in the planning system.

The main reasons for relaxing the rules on converting offices into homes are:

- It will encourage developers to bring underused offices back into effective use as houses for local residents.

- It will provide badly needed homes and make a valuable contribution to easing the national housing shortage.

- It will help create jobs in the construction and services industries.

- It will help regenerate town centres, bringing a greater resident population to our high streets, increasing footfall and supporting local shops.

Who supports it?

Well, apart from the Government and Mary Portas, the property industry is pretty keen on the Offices for Homes plan too.

The British Property Federation says the move will boost housing supply and bring vacant property back into use.

It argues that in the context of the acute shortage of homes in the UK, this ability to convert is good for those needing a place to live, the wider community and local authorities.

The Confederation of British Industry is also behind the changes, not least because it will support the construction industry.

Of course, it comes as no surprise that either organisation supports a plan that relaxes red tape and promotes development. But the statistics also point to a massive amount of unused office space across the UK, as the financial downturn has led to firms folding.

According to data published in the Financial Times from consultancy Jones Lang LaSalle, office vacancy rates in the Thames Valley are a whopping 21.2% for example. In Birmingham the figure is 17% while 10% of stock in Manchester, Leeds and Bristol is sitting empty.

On the face of it seems pretty hard to argue with the logic that a short-term relaxation of the rules to stop these buildings becoming derelict, and to hopefully breathe some life into our towns and cities, is a positive step.

But there is already one major opponent to the scheme, and it wants to opt out of the rules.

Not in the square mile

The City of London Corporation has confirmed that will seek an exemption from the new rules. There is a provision for local planning authorities to seek an exemption if they can justify it on economic grounds – and the City reckons it has them.

After all, it is a global financial and professional services powerhouse that has long fought against residential development, which could dilute the City’s status as an international business district.

But it’s not just the City where there could be concerns about the new rules. Because there is a growing discrepancy between the price of office and residential space, it is feared that some developers would be keen to cash in on converting offices to homes, which would further speed up the trend of city living in our cities.

There’s nothing wrong with that, but some argue that we need some parts of our towns and cities to remain business sectors to drive economic growth. And of course, it won’t be easy to reconvert a block of apartments back to a usable office facility once it’s been changed.

This means that when the economic upturn eventually comes, we could be left with a lack of office space in certain parts of the country.

There’s also the issue of supply and demand. Let’s face it, there is isn’t exactly a lack of city centre flats in many regional cities, or a huge demand for them.

Need more clarity

As always with major planning initiatives, the devil is in the detail, or lack of it, with some experts raising concerns that there is, as yet, no mention of whether converted offices will need to provide a certain proportion of affordable housing – something that has a massive financial impact on local authorities.

Others have suggested that the number of conversions that will fit into the new ‘permitted development’ category could actually be limited. In the Government’s original consultation offices that required external changes would still need to go back into the planning system for permission. It’s likely many office buildings will need external changes – just think of the windows – so the number of offices that actually can be converted without planning permission could be restricted (unless the terms have changed since the consultation).

No doubt we’ll get more detail on the Offices to Homes plan in the coming weeks, but in my opinion the principle is sound. I’m not sure the impact will necessarily be as great as the Government wants it to be, as developers may be commercially cautious in regional cities for example.

But in towns where there is an appetite for this type of residential property, surely it makes complete sense to take buildings that would otherwise lie empty, and bring them back to life.

What do you think?

More on property from Lovemoney:

Government landlord licensing scheme branded a failure
Why the experts are right about house prices
The mortgage that gets cheaper as you save energy
Why it will be easier to get a mortgage in 2013
The questions you must ask before you buy a house


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