Mark Dodds, our National Head of Planning & Development Consultancy, said: “Chancellor George Osborne today missed the opportunity to further kick-start development across the UK by not cementing the proposed change that will allow the conversion of offices into residential space.
“While we welcome the government’s decision to allow greater flexibility for the re-use of commercial property, which is often restricted by planning policy, leading to significant periods of vacancy, they have not gone far enough in actually implementing the legislation.”
An interesting outcome of the proposed change will be allowing developers to avoid affordable housing and a number of planning contributions. This will encourage conversion in areas that may not have previously been viable.
Mark went on to say: “We anticipate developers will seek to utilise these planning rules in higher value areas, notably central London, which tend to be where local authorities have sought to oppose this change in regulation.”
From a London perspective, there is approximately 6.8 million sq ft of vacant office floorspace within the City of London and an additional 9.2 million sq ft in the rest of central London and the Docklands – providing significant opportunities for developers and landowners.
Empty Property Rates
Focusing on Empty Property Rates, Richard Wackett, our Head of National Rating, said: “The Chancellor’s Budget today has again failed to boost business and lift consumption - the primary concerns of the business community. The autumn statement promised an 18 month extension to Empty Property Rate exemption for new build of commercial property. We welcome this exemption, which will contribute to boosting new property development in British high streets.
“However, we would have hoped to see the Empty Property Rates exemption also applied to older properties in the Budget announcement today. Existing property owners without tenants continue to demolish their assets, which will accumulate problems for future supply and discourage innovation.”
We have previously recommended a plan for growth founded on reliefs for owners and developers including:
1. Abolition of the rates charge on vacant properties,
2. An early revaluation in order to properly reflect current market (rental) values,
3. A small business exemption for all businesses with a rateable value of less than £20,000.
Richard concluded: “Without an incentive for business to occupy and demand good quality accommodation the economy is bound to stagnate and without new employment consumption and demand will not grow and tax revenues will shrink. The application of some interim exemption to new build is too little, too late. What is required is a shift in the burden away from the SME sectors which desperately need some help over the next five years.’’