FT – Cabinet Clash Over Offices to Flats Plan
New freedoms for developers to turn office blocks into flats have received a cautious welcome from business and local government leaders, despite a rearguard action against the proposals from Vince Cable.
The rules, which are likely to be announced later this week, will expire in two years under a compromise secured by the business secretary. He has also carved out other exemptions to the plans so they will not apply to shops, hotels or industrial parks.
Mr Cable’s intervention reflects concern among some businesses and city leaders about the effect of converting office space into residential property. But the proposals, pushed by planning minister Nick Boles, were praised by the Institute of Directors, the business lobby group, as a “sensible” way to tackle Britain’s housing shortage.
“There is a large amount of vacant or unsuitable office space which could be put to better use as housing, giving the construction sector a much-needed boost,” said Edwin Morgan, policy adviser at the IoD. “The government should go even further and allow other types of commercial property, shops and warehouses, to be changed more easily to housing.”
Mike Jones, chairman of the Local Government Association’s environment and housing board, said the measures could be helpful but warned “it should be for councils and residents to decide when and where this relaxing of the rules would be beneficial”.
“It should not just be developers who have a say in plans which will radically change the shape of towns, cities and villages,” he added.
Under the proposals revealed by the Financial Times on Tuesday, councils would be allowed to make an exceptional case that the changes would be bad for employment in their area.
The City of London will win immunity because of its large office district, while two other London councils, Westminster and Kensington & Chelsea, are also likely to try to opt out.
Mr Cable had fought the proposals on the basis that they could damage employment while giving windfalls to property developers.
“There has been a really major battle over this, the issue is very controversial in government as well as outside,” said a senior government official.
The plans have strong backing from George Osborne, chancellor, and David Cameron, prime minister.
One Tory aide said the compromises were due in large part to lobbying by external groups, such as the Federation of Small Businesses and the City of London.
The controversy surrounds the fact that once offices are turned into residential property, which has a higher value, it is very hard to convert them back if demand for office space picks up.
Patrick Michell, a partner from architects Platform 5, predicted a “gold rush” of developers seeking to convert office space. But he said it should be up to local authorities to decide what was appropriate in their area. “They seem to be moving away from localism and towards just wanting big infrastructure whatever the locals think,” he said.
Sir Edward Lister, Boris Johnson’s deputy mayor for planning, said City Hall was “broadly in favour” of a relaxation of change-of-use rules, though not in the City of London or Canary Wharf. “The City hasn’t got the kind of infrastructure for this sort of change and it could damage the City brand.”
Westminster City Council said on Tuesday that it deserved exemptions to prevent the “destruction” of business communities.
“The government is being a little naïve on this issue,” said Robert Davis, deputy leader of Westminster City Council. “In commercial areas like Westminster we are successful largely because of businesses. To allow offices to convert to residential, you are going to lose the heart and centre of business.”
The Royal Borough of Kensington and Chelsea also indicated that it would seek an exemption from the new rules. The borough, which includes some of the most sought-after residential property in Europe, said: “We have a good case for exemption and will be putting evidence forward to support our case,” a spokesman said.”
Property developers said the change of rules would likely to have the effect of bringing developments forwards, particularly on the London market.