The impact in London

Greater London has been particularly affected by the introduction of permitted development rights. This is because in many parts of the capital there is a significant differential between office and residential values which, combined with high demand and land scarcities, has created an incentive for landlords to seek conversion of viable and occupied offices without seeking planning permission.

London skyline at night

The impact of the permitted development rights on London’s economy has been multi-faceted. Some of the key consequences include:

  • Loss of key office accommodation: figures submitted by London boroughs indicate that approval has been granted for at least 100,000 sq m of wholly occupied office floorspace between May 2013 and April 2015, and 834,000 sq m total office floorspace.
  • Loss of occupied space: the existing permitted development rights make no distinction between occupied and vacant office accommodation, and allow for no consideration of the impact of the loss of key office space.
  • Increase in office rents: some boroughs have reported that permitted development rights have had an impact on land values for scarce office stock, threatening the viability of office redevelopment and refurbishment even in areas where there is clear demand.
  • Reducing viability of local office markets: in outer London in particular, a critical mass of office accommodation is being lost, reducing the viability of economic centres and the availability of neighbourhood office accommodation such as dentists’ surgeries. Parts of outer London such as Richmond-upon Thames are particularly vulnerable to conversions through permitted development given the substantial differential between office and residential values in such areas. Richmond borough alone has seen at least 57,000 sq m of office floorspace approved for conversion to residential use.
  • Introduction of poor quality new housing: London Councils supports the need for a significant increase in housing supply in the capital, but this should not be achieved at the cost of producing poor-quality residential accommodation. As residential conversions are no longer required to be plan-compliant, many unsustainable and poor quality schemes have been brought forward, with the local planning authority having no power to ensure they meet basic standards such as minimum space and adequate light and ventilation.
  • The loss of new affordable housing supply: a number of large office buildings have been approved for conversion through the policy which, had they gone through the planning process, would have been a significant source of either new affordable housing or contributions towards offsite provision. Figures collated by London boroughs indicate that prior approval has been granted for the conversion of at least 7,000 new dwellings in schemes of 10 units or more. Had this number of homes been approved through the planning system, they would typically be expected to support the delivery of as many as 1,000 new affordable homes, or equivalent Section 106 developer contributions on other sites.