Out-Law News 1 min. read

Permitted development rights causing squeeze on commercial office space, says report


A report from planning consultancy Nathaniel Litchfield and Partners (NLP) has identified pressure from permitted development (PD) rights as an influence in the decline in available commercial office space in major urban locations.

The UK government introduced a temporary PD right in 2013 allowing offices to be converted into homes without the need to apply for full planning permission. A report issued by NLP last month said the conversion of offices to homes since the right was introduced had caused problems in areas with a housing shortage, fuelling the fastest decline in the availability of commercial property since 1998.

The report said central office market areas in urban locations faced "a potential supply crunch and rising rental levels" and that pressure from the PD rights was also being experienced in edge of town and suburban employment centres.

However, the rights were having "a positive effect" in some areas "by removing poor quality office space and driving up rental values to a point at which new office development becomes viable", the report said. NLP also noted that "the changing dynamics of office locations presents an opportunity for peripheral and out-of-centre business parks to reinvigorate themselves through repurposing existing stock."

Planning expert Nick McDonald of Pinsent Masons, the law firm behind Out-Law.com said: "whilst identifying the effects of one legislative change on a sector amongst many other factors is difficult, this report concludes that the office-to-residential PD rights is likely to be increasing the pressure on office space. That’s not surprising as a reflection of basic market forces, and it may be assisting with bringing more buildings into use in some areas."

"It will be interesting to see what other de-regulation measures the government may now bring forward as it moves forward with its various manifesto promises to support neighbourhood planning, the use of brownfield land 'as much as possible' and build hundreds of thousands of new homes a year, whilst protecting the green belt and other green spaces," McDonald said.

In its technical consultation on planning last year, the government said it was considering making the PD right permanent. However, it faced strong opposition to the proposal, particularly from councils in London and members of the London Assembly, and mayor of London Boris Johnson wrote to the government in September to make "a vigorous case for the retention of business space in London".

While communities secretary Eric Pickles said last month that the government would "further consider the case for extending the office to residential reforms", an extension was not included in the Town and Country Planning (Use Classes) (Amendment) (England) Order 2015, which was laid before parliament before its dissolution ahead of the general election and introduced a raft of new PD rights.

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