New permitted development rights which allow change of use from office to residential were discussed at a seminar hosted by CBRE.
The changes, which came into force last month, have the capacity to substantially change the character and economic performance of commercial areas and, consequently, have met with opposition: over 300 (84%) local authorities applied for exemptions to the new legislation but only 17 were successful. There are however numerous opportunities for developers, property owners and investors to benefit from the change in legislation, says CBRE.
The Government has heralded these changes as part of their programme to ‘make planning simple’. However the reforms are anything but says the leading global real estate services firm. They are complex, time limited and not applicable to some of the most sought after residential areas of the country.
Furthermore, CBRE anticipates there being legal challenges surrounding some of the clauses and this in turn leads to concerns for mortgage lenders and investors towards the end of the qualifying period.
On a positive note, Nick Belsten, director of London planning at CBRE, commented:
“Despite this current uncertainty surrounding the legislation, we are confident that it presents a good opportunity for developers and investors willing to spend the time and effort required to create sellable schemes and will go some way to providing additional housing to a low-supply market in many areas.”
Alastair Perks, director of central London development at CBRE identified locations where this is most likely to take place: Croydon, Reading, Watford, Harrow, Bristol and Manchester; and in London, Bayswater, parts of Camden and Islington, Wapping, The Highway (Tower Hamlets), Lambeth and Belgravia.
Describing how developers can reap benefits from the change, Lisa Hollands, managing director of residential at CBRE, said:
“The commercial property market is full of opportunities for conversion and there are also lots of gaps in the residential market to be filled – the skill will be in matching the two. Detailed attention needs to be given to issues such as space, lighting and layout to ensure that developers create units that will sell. It is worth spending time carefully considering the target market, and spending time and money optimising layouts, specification and interior design, to create a successful product.”