In Britain, government proposals to allow offices to be converted into homes without planning permission may provide development opportunities for investors, planning experts say. Changing a building from commercial to residential use can increase its value.
Chancellor of the Exchequer George Osborne announced in his budget speech last week that he wanted to do away with the need for planning permission on office-to-residential conversions to boost house building.
Residential construction in Britain last year sank to its lowest level in peacetime since 1923, with only 129,000 new homes completed. Of these, 2.8 per cent were former office premises.
Housing is in short supply, but there is a surplus of offices - commercial property vacancy rates stand at 7 per cent to 9 per cent - so the government wants to make it easier for property owners to turn unwanted business space into much-needed flats.
Jonathan Manns, senior planning surveyor at estate agency Knight Frank, said the main beneficiaries of the proposed change would be people who owned or had the ability to purchase commercial property.
'While first-time buyers would gain the opportunity to convert relatively cheap business premises, this would also be available to private developers who might compete with them for property,' said Manns. 'In an era of restricted finance, incurred through tightening of mortgage lending criteria and earnings ratios, the private developer would certainly seem to have the upper hand.
'What will be the most interesting is the effect on property owners, who may see an increase in 'hope value' attached to their property or choose to convert properties themselves to secure an uplift.'
