London councils report on impact of office-to-residential permitted development right

The government introduced a temporary PD right in 2013 allowing offices to be converted into homes without the need to apply for full planning permission. This temporary PD right expires in May 2016 but it is not yet clear what the position will be after this date.

Specified areas in London, including Canary Wharf, the Central Activities Zone and Tech City are exempt from the PD right. Some London Boroughs have implemented an Article 4 direction and removed the use of such right.

According to the report, the introduction of the PD right has had a significant impact on the supply and quality of office space available in London. Key locations for offices have been lost as they have now been converted to residential units and rental prices for office spaces have increased in some areas.

Figures based on data submitted by the London boroughs show that 834,000 square meters of office space has been lost, according to the report. The figures also show that"at least 2,639 office to residential prior approval applications have been received by London boroughs between May 2013 and April 2015". Since May 2013, approval has been granted for over 16,600 new homes, the report said.

A further concern noted is the loss of potential affordable housing as local authorities cannot impose planning obligations when developers build new homes under the PD right.

According to the report, "prior approval has been granted for the conversion of at least 7,000 new dwellings in schemes of 10 units or more". If these had been approved under the usual planning regime, the developer would be required to deliver approximately 1,000 affordable homes or an equivalent contribution. 

Last week, London Assembly members agreed a motion stating that the May 2016 deadline "should remain and that no attempt should be made to extend these rights or make them permanent… The Assembly believes extension could further deplete the number of commercial sites, driving up the cost of property, reducing opportunities for new businesses and jobs, and ultimately hindering London’s economic development".

Housing and planning minister Brandon Lewis confirmed at a meeting of the communities and local government select committee last week that the government was "looking to make an announcement around the future for [PD] rights relatively soon".

Planning expert Richard Ford of Pinsent Masons, the law firm behind Out-Law.com said: "We continue to await DCLG's confirmation on whether office to residential conversion PD rights will continue. Excitement built up last month with an imminent announcement rumoured but it keeps on being pushed back."

"It is clearly important that an announcement comes no later than the Autumn statement so we know what we are dealing with. We are also waiting for confirmation whether the section 106BA and BC viability review process will be continued and are pressing the government on that too," said Ford.