Permitted change from office to residential

11 Mar 2013

The Government has confirmed that from Spring 2013 the permitted development rights will be temporarily extended for a period of three years to include a change of use from B1(a) office to C3 residential.  This is an attempt to address the issue of low demand for office space and high demand for residential property.  This could also help bring life back to the high street by changing vacant office space above a shop into a residential flat. 

Local Authorities had until 22 February 2013 to apply for an exemption for specific areas on the basis that this new permitted development right would lead to the loss of a nationally significant area of economic activity or substantial adverse economic consequences.  The exemptions that have been approved will be announced in Spring 2013.

A developer will still need to consult with the Local Authority before implementing this change of use.  This prior approval process will cover off any issues with significant transport and highway impact, development in hazard zones, areas of flood risk and land contamination.

In addition, if any physical development is required then this will still be subject to the developer obtaining planning consent in the usual way. 

Developers will need to carefully consider implications such as social housing requirements, any potential Community Infrastructure Charge, the VAT status of the property and any Stamp Duty Land Tax liability.  

So, will developers have the opportunity to make a significant profit out of a failing office investment?  Possibly, but the continued shortage of development finance and lack of bank funding could prevent developers from taking full advantage of this change.