Permitted Change of Use – Office to Residential – Experience so Far

by Chris Sinton

In this, HOW’s inaugural blog, I thought I would revisit a subject I prepared a “KnowHOW” on almost 10 months ago, the Government’s relaxation of Permitted Development rights to allow change of use from Office (B1a) to Residential (C3).

Looking back to last year Nick Boles announced that the relaxed permitted development rights would enable the conversion of redundant, empty and under-used offices, promoting the development of brownfield land, and could generate an additional 100,000 new homes across the country, with 60,000 of those located outside the capital. The proposed changes also effectively removed the requirement for affordable housing through S106 Planning Agreements thereby providing further incentives for developers to convert office space into housing.

Progress to date

An Estates Gazette Survey (10 January 2014) found that there had been more than 2,250 applications for change of use from office to residential in the first six months since the Permitted Development rights were relaxed. According to the Planning Minister some of these developments are set to deliver more than 100 homes each.

Despite encouraging signals, this is set against a backdrop of significant resistance from Local Planning Authorities with 1,387 exemption requests received by the Government, a failed High Court Challenge brought by the London Borough of Islington (and supported by London Boroughs of Camden and Richmond upon Thames), and the issuing of eight Article 4 Notices attempting to remove Permitted Development rights.

There is also a clear geographic split in the number of applications submitted, with those received in London and the South East far outstripping those submitted elsewhere. Whilst the majority of press has centred on the impact of the changes in London and the South East the second half of this blog focusses on how the relaxation has impacted on Manchester.

Experience in Manchester

Manchester City Council was one of 17 authorities (the only one outside of London and the South East) which was granted an exemption area by the Government, thereby protecting the majority of Grade A office space in the City Centre from conversion. Research undertaken by Inside Housing (December 2013) suggests that the Council had received fewer than 4 applications to convert redundant office space in the City since the policy was introduced. This compares with London Borough of Croydon which received 33 applications to deliver 1,182 homes.

Potential reasons for the differences could be attributed to the following:

  • The City Centre Core is covered by two exemption areas which have safeguarded prime office space from conversion;
  • The large proportion of offices with Listed Building status;
  • The viability of conversion relies on the uplift from residential being greater than the existing office for which Manchester is currently demonstrating a strong demand;
  • Manchester currently has a plentiful supply of existing ‘purpose built’ city centre flats; and
  • The design of apartments are restricted by the internal configuration of the existing office space and any changes would still be required to meet Building Regulations, which can prove costly in certain circumstances .

It is evident that London and the South East have been disproportionately impacted by the Government changes which could, despite helping to addressing an ever growing housing crisis, have a significant impact on the supply of good quality office space and potential longer term economic growth.

Despite this, for developers who can meet the Government’s criteria, the potential gains to be had for conversion in the right places will continue to make Permitted Development from office to residential an attractive proposition.

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Published: 18/03/2014


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