One in five office-to-residential conversions vetoed by English councils

One in five of around 5,000 applications to convert offices into flats across England under permitted development rights (PDR) were blocked by councils between April 2014 and June 2015, according to new research.

PDR allow certain building works to be carried out without a planning application. However, prior approval by councils is still required where certain regulations or consents are needed.

Analysis from Daniel Watney LLP, a full service property consultancy, showed 916 of 4,887 applications for office-to-residential conversion (OTRC) were refused on ‘prior approval’ grounds across England. In London one in four (493 of 1,959 applications) were blocked between April 2014 and June 2015 while the average for other cities was one in ten.

This research, based on government data, is the first national overview of OTRC applications since planning laws were relaxed in May 2013.

The change has proved popular with developers who are able to save time and money through having greater certainty around the planning process and not needing to provide affordable housing. This enhances the viability of conversions – which can often be complex and costly on account of the work needed to fix up old buildings.

While many councils welcomed the proposals - which allowed derelict office blocks to be restored for new homes - others ardently opposed the plans. Six London councils lost a legal challenge in December 2013 to overturn PDR. Claims by Islington, Camden, Richmond upon Thames, Lambeth, Sutton and Tower Hamlets councils were dismissed by the High Court.

Daniel Watney LLP’s research found just over a third of the total applications went through without any council involvement.

London boroughs received many more applications than most other local authorities, with four in ten of OTRC applications in the period being made in London. Combined with office costs rising dramatically across the capital, this goes some way to explain the high numbers of rejections.

However, the high levels of refusals, especially in London where the bulk of OTRC applications are being made, may be a disappointment to the government which has hinted that OTRCs will play a key role in hitting ambitious targets to build 200,000 ‘starter homes’ by 2020.

Charles Mills, partner at property consultancy firm Daniel Watney, said: “Office conversions have proven a reliable source of much needed new homes. The prior approval process is important to ensure the safety of developments and the local area - and doubtless many of these rejections will be justified - but councils must not misuse it as a workaround to veto residential conversions that the new permitted development rights were intended to encourage.”

Marnix Elsenaar, partner and head of planning at corporate law firm Addleshaw Goddard, said: “While permitted development rights for office to residential conversions have proved popular on account of removing the need for planning permission, converting old office buildings can often prove more complex and costly than first appears. In some cases the lack of flexibility in design and low ceiling heights can restrict the value of residential units. Understanding and de-risking the potential development risk of old buildings – which may have problems buried below the surface – is critical to making office-to-residential stack up.”

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