Business Law: Emma Cracknell on new rules for the conversion of offices to residential use

Emma Cracknell of Barker Gotelee

Emma Cracknell of Barker Gotelee - Credit: Archant

AS part of measures to help kick-start the economy, the Government has recently announced that legislation will come into effect this spring allowing a change of use from office to residential premises without the need to apply for planning permission.

The new legislation will run for an initial period of three years, towards the end of which the Government will decide whether the change should be extended indefinitely.

In recent years there has been an increasing appetite for converting empty offices to residential use given the housing shortage, low demand for office space and the liability for rates on vacant premises. The Government hopes its measure will promote economic growth and allow vacant buildings to be brought back into productive use.

Under current legislation planning permission is usually required for the change of use from office to residential. The legislation will authorise a change of use without the need to make an application for planning permission. There will, however, be a limited approval process to follow.

Approval will be required in the case of significant transport and highway impacts and where development is proposed in safety hazard zones and areas of flood risk and contamination. Developers will therefore need to check with the relevant local authority before implementing any change of use. A full planning application will still be required if the change will materially affect the external appearance of a building.

Local authorities may seek an exemption to the new legislation for specific parts of their areas where there are “exceptional circumstances”. In these areas, any proposed change will still require a planning application in the conventional way.

There are a number of issues for a developer to consider before taking advantage of the change. For example, there will be tax considerations in terms of both VAT and Stamp Duty Land Tax and these should be addressed at an early stage to ensure that the scheme is financially viable from the perspective of both the developer and the eventual purchaser. If the property to be converted is leasehold there is also the question of whether landlord’s consent is required to the change of use and the physical conversion works. The lease may prohibit a change of use or the structural works required to facilitate it. To get a landlord on board with the scheme it may require a share of the profits generated by the proposed conversion.

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A developer would therefore be well advised to carry out a thorough appraisal of the viability of conversion from office to residential use at the outset.

: : Emma Cracknell is a solicitor with Barker Gotelee, based at Martlesham Heath.

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