Permitted Development Rights by Jamie Hopkins, CEO of Workspace Group and SME Working Group Member and Sara Turnbull, CEO of Bootstrap Company

11 January 2016

On 30th May 2013, the legislation allowing the conversion of office space to residential accommodation (so called “office to resi conversion”) without the need for planning permission came into force. Two years on, we are starting to see the effect of this legislation on the provision for office space in London.

Research by Estates Gazette* shows in 2014, London Boroughs received around 300 permitted development right applications to convert office space to residential accommodation. According to the research “the first year of PD Right legislation generated 2,274% more office to residential applications than the yearly average of normal applications”.

Boroughs like Croydon, Harrow, Hounslow, Westminster (despite an extensive exclusion zone for PD rights), Islington, Tower Hamlets, Camden and Lambeth have seen a large number of PD applications come forward, with every application representing a further loss of office space in the capital.

A London Council paper published in August 2015** estimates over 100,000 sqm of key office accommodation has been subject to a successful PD application which rises to around 834,000 sq m when you look at total office floorspace across London. The paper also stated the ease of office to residential conversion has resulted in an increase in office rents in some boroughs, a reduction in the viability of some local office markets, and the delivery of poor quality new housing in London.

The working day is no longer complete without an approach from an agent trying to sell the virtues of investing in a PD rights scheme. And who can blame them? The Savills London and South East Development team alone have reported been responsible for £160 million worth of business in this field since May 2013.

The Open Workspace Providers Group (OWPG), which reports into the London Enterprise Panel, remains extremely concerned about the impact of PD rights on the supply of affordable workspace in London. The Government’s Housing and Planning Bill, currently making its way through the legislative process will extend this policy, and effectively make it a permanent fixture within the UK planning system.

If the rate of conversion identified by London Council’s continues, we are worried London could face a fundamental shortfall in its provision of affordable workspace, with the “open workspaces” such as coworking spaces, incubators, accelerators, makers and artist spaces coming under particular pressure, as the competition for an ever increasingly smaller pool of space becomes more fierce.

OWPG will be lobbying DCLG in the coming months to ensure the PD rights legislation contains some protections for London’s affordable workspace and we would welcome the views of Londoners on exactly how we might go about doing it. Whilst everyone will welcome measures to tackle the housing shortage we face, we are certain housing does not have to come at the cost of undermining the provision of open workspaces.

Open workspaces in London are woven into the fabric of the London economy, helping to support the new and growing companies that fuel the capital’s growth. We have recently commissioned research to capture exactly what that contribution looks like, which will be published in Spring 2016.

However, what we know already is this. A loss of open workspaces, will come at an economic and social cost, and that’s the case we will make to government in the weeks to come.