Local Authorities fear scrapping Office to Resi opt outs will threaten London Supply

Posted on 8 September, 2014 by Neil Bird

Government plans to scrap the right of local authorities to seek exemption from the office to residential conversion scheme threatens to take millions of square feet out of the London market.

Local-Authorites-fear-that-scrapping-Office-to Resi-opt-outs-will-threaten-London-Supply

The scheme, which allows landlords to convert office space into residential accommodation without seeking planning permission, was introduced last year. The aim of the legislation was to increase the housing supply while simultaneously reducing the level of redundant office stock.

Due to concerns that the scheme would lead to a widespread loss of office space, Local authorities were given the right to appeal to opt-out. In order to be granted an exemption they were required to demonstrate that inclusion would be damaging to business in the area.

A number of local authorities sought exemption but most were unsuccessful. Others, with economically important business districts, were allowed to opt out, but new government proposals will end this right from 2016.

This prospect has fuelled fears that the office supply in some London boroughs will be put under even greater strain and could threaten the economic recovery.

Over 800,000 sq ft of office space has been lost in Westminster alone since the office to resi scheme was introduced, according to figures supplied to the FT. In contrast the borough, which was granted partial exemption, has only 250,000 sq ft currently available and just 180,000 sq ft under construction.

With some of the highest house prices in the country, it is not difficult to see why landlords in the borough might be tempted to convert properties to residential use.

Deputy leader of Westminster Council, Robert Davis, describes the loss of office space in the area as a ‘serious issue’ and believes that only those able to afford prime residential property will benefit from the scrapping of exemptions.

“Office space in central London is so crucial to the prosperity of London and the UK was a whole. The government recognised these important issues in allowing the central parts of Westminster to opt out

Neighbouring Kensington and Chelsea currently enjoys full-borough exemption status and is also opposed to the government’s plans.

“The value of residential property here means the pressure to change to residential use is enormous,” a council spokesman said.

“It is nonsensical to change the policy suddenly after such a short space of time. We would lose a very large amount of business floor space and many thousands of jobs.”

Despite these concerns the government continues to defend the scheme, insisting that it has provided desperately needed homes for ‘hard-working people’ across London. The proposal to end opt-outs is currently in the consultation stage.




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