Commons clash over office-to-home conversions

MHCLG minister holds government line as MPs call for conversions to be better regulated or closed down.

Westminster in London next to the Thames

Where accommodation created from office conversions counts toward New Homes Bonus payments, councils don’t have the incentive to restrict such conversions, the Commons has heard.

At Westminster Hall, members debated how to regulate residential-office-block conversions under Permitted Development Rights (PDR).

The Hall heard calls for all such conversions to be closed down, but MHCLG minister Luke Hall – standing in for Esther McVey, sacked as housing minister earlier in the day – said PDR made “ an important contribution to housing delivery”.

Tory Rob Halfon secured the debate on the extent of such conversions in Essex – with specific reference to his Harlow constituency.

There, members heard, around 1,100 units have been created, none of which has been tested against the requirements of the local plan.

That, said Halfon came with attendant social issues and the temptation for London borough councils to house their homeless in the blocks.

He said: “Permitted development rights were never meant to be about building ghettos.

“There have to be rules, particularly about quality, and councils must have some say in how office blocks are converted.”

Councils have had powers to restrict permitted development rights under an article 4 direction at least since the Town and Country Planning (General Permitted Development) Order 1995.

Changes made in 2010 mean it is now for local planning authorities “to confirm all Article 4 directions”, making it easier for councils to invoke restrictions on permitted development rights.

But Halfon outlined another factor: residential premises created from office conversions under permitted development that add to an authority’s council-tax base count for the purpose of New Homes Bonus payments.

That, said Halfon, prompted questions such as around the lack of financial incentive to take action to restrict such developments

He said: “That is particularly the case in Harlow, where the new homes bonus created a grant back to the council worth more than £1m in 2018-19.

“With more than half of the new properties last year being office conversions, Harlow council should do more to use the money to help individuals and provide security around the town,” he said.

The debate focussed on three key themes:

  • Councils need stronger powers to take meaningful action against PDR conversions where they create issues
  • Councils should do more to use the powers that are available to them
  • Could the government ensure stronger solutions to allow councils to deal with the issues PDR has created

PDR schemes are not bound by section 106 obligations, and the LGA estimates that in the past three years more than 10,000 affordable homes have been lost as a result as a result.

Research by the Royal Institution of Chartered Surveyors indicated overall PDR schemes were “significantly worse” than homes that had been through the full planning process – with only 30% of homes built under PDR meeting minimum space standards.

Research by Shelter revealed 90% of the £1.1bn being spent by councils on temporary accommodation went to private landlords and letting agents – with investors buying office blocks for residential conversion without planning permission.

The converted blocks were then charged back to councils at significant cost – despite sub-par standards.

In one case highlighted by Shelter, a temporary-accommodation provider bought a permitted development block for £8m and leased it to the council for £1m a year for three years, before selling it to the same council for £13m – making a 50% profit, plus millions in rent.

Labour’s Sarah Jones – with more than 600 conversions in her Croydon constituency – hoped the stats prompted Housing Secretary Robert Jenrick to have “second thoughts” over a consultation originally introduced to look at expanding permitted development.

“The nature of retail and office space is changing, and traditional high streets are changing, but converting everything into residential at great speed with no quality is not the way to help our high streets,” she said.

Hall maintained that PDR played an important part in the planning system and made an important contribution to housing delivery.

“Those rights are delivering additional, much-needed homes that may not have been delivered otherwise, and have attracted new developers into the market,” said Hall.

The debate heard that, in the four years to March 2019, some 54,000 homes to buy or rent have been delivered through those rights, which allow a change of use from office to residential.

Hall said: “We are clear that permitted development rights are a worthwhile way of making better use of existing buildings and preventing them from lying dormant and unused, which helps reduce the need to build on greenfield sites.

“Those rights also provide flexibility for property owners and offer a simplified approach to securing planning agreements.

“We do not want local authorities to be in a hurry to remove rights – they should take the time to ensure that they are getting those decisions right.

“An ongoing supply of new homes delivered through permitted development is important if we are to hit our ambitious housing targets while driving down rents and offering affordable homes to help people on to the property ladder,” he said.

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