A new report by Savills has argued that current proposals to convert empty commercial property sites into residential housing without planning permission will develop a “north-south opportunity divide”.
Consultancy firm Savills has suggested that these new plans to change B1(a) offices into C3 residential sites may end up with new homes only being built in wealthier areas, due to residential values often being much higher than office values in such regions. Therefore, contractors in cities such as Manchester would end up losing out, whilst southern areas within London would reap the benefits.
For example, the capital value for office space in Manchester is £275 per sq ft, according to the report, whilst residential space is £280 per sq ft, hence conversion would only create a profit of up to £5 per sq ft. Contrastingly, value for commercial space in Croydon is £160 per sq ft, with residential space reaching as high as £400 per sq ft. This means that developers would enjoy a value uplift of £240 per sq ft in such areas.
Analysts worry that these plans may end up causing a major distinction between the north and south of England. In turn, many contractors and developers will shift their gaze towards the south, and therefore neglect less affluent areas in the north.
According to Planning Resource, Savills research director Mat Oakley said: "We expect a ripple of new office to residential conversions, particularly if affordable housing requirements are lifted. But in locations where residential values and market activity are still heavily suppressed, caution will quickly displace enthusiasm.”
City Hall, London Assembly’s planning committee, recently criticised the legislation, stating that commercial property in the capital city could be cut by 25 per cent under the new plans.
The new rules are set to be implemented across the UK from May 30th.