New planning rules are going to make it much easier for owners of a commercial property to convert it into a residential property, which could be worth a lot more money.
The changes are appealing to the government, as they go some way towards dealing with the housing shortage. They also appeal to commercial property owners who have witnessed the growing gap between the price of offices and the price of flats and houses.
The Financial Times reported this week that the Government’s Planning Minister, Nick Boles, is set to announce a change in the planning rules that will allow certain commercial property (excluding shops or warehouses) to be changed into residences without any permission being needed. The change will be known as the “permitted development right”.
Vacancy rates in the commercial office sector have reached a high of 21 per cent in some regions, according to ministers. However, it is commercial property owners in central London that are most likely to jump at the chance to convert their vacant properties, due to the soaring house prices in the capital. The average residential property in London’s West End is valued at £3,000 per square metre, whilst office space is valued at a much more subdued £2,375 per square metre.
The City of London, however, has successfully applied for an exemption to the new regulations as it waits to see how the Square Mile will recover in terms of demand for high profile office space in the coming months and years.