Developers converting offices to residential use will soon have to provide “starter homes” at a 20% discount to market rate under plans being drawn up by the government.
The policy, which is expected to be announced in the run up to the Conservative party conference on 4 October, will be introduced alongside the extension of the permitted development rights rules which allow conversions without the need for planning permission.
Ministers are still consulting on the exact threshold of starter homes. However, it is expected that the rate will be set nationally rather than left up to local authorities to determine, some of which oppose office to residential conversions.
The policy is an early indicator of one way in which the Conservative government plans to meet its manifesto commitment to build 200,000 starter homes by the next general election.
Previously office-to-residential conversions undertaken under permitted development rights rules have not had to provide any planning gain, such as affordable housing or section 106 contributions.
Adding the starter home requirement is likely to have an impact on the viability of some conversion schemes.
However, introducing the requirement on conversions is seen as attractive by ministers because it will not affect affordable housing provision, in contrast to requiring starter homes on new-build schemes which could prove controversial given they will be delivered instead of other forms of affordable housing.
Further details of how the government plans to meet its starter home target are expected to laid out in the housing bill, which is likely to go before parliament following the party conferences next month.
The bill will set out the detail for previously announced government housing policies, including the brownfield register, the productivity plan for planning, the “permission in principle” for brownfield land and measures to extend right to buy to housing association-owned homes.
Housing minister Brandon Lewis this week told the communities and local government select committee that an announcement on permitted development rights would be “in the not too distant future” but separately conceded that he was frustrated by the delay.
Ministers have confirmed the starter homes will be at 80% of local market rates up to a value of £250,000 outside London and £450,000 in the capital.
However, internal debate is ongoing as to what, if any, other requirements should be imposed on developers seeking to convert offices to residential without planning permission.
A CLG spokesman said: “We are giving further consideration to PDR for change of use from office to residential
“We will make an announcement in due course.”
Separately, a report published by the British Council for Offices and CBRE this week revealed that 6m sq ft of office space had been lost to residential conversion through PDR in 2014.
jack.sidders@estatesgazette.com
