Permitted development rights (PDR) were introduced in 2015 to allow the conversion of certain types of property from commercial to residential use without the need to obtain planning permission.
There were fears that PDR would result in a shortage of office buildings.Immediately following the introduction of PDR, there were many conversion schemes. According to Harry Peradigou of Brightstone Law, conversions of office space have slowed down, to a level where they are now a minority of development projects. He said that roughly one in 30 or 40 commercial mortgages and bridging loans are for residential conversions.
Most conversions are in older properties that are less in demand by office clients. Many companies leave older buildings for purpose-built ones.
In many large UK cities there has been a large rise in office rents, so converting offices to residential accommodation no longer makes financial sense. Conversions are more likely to take place in smaller towns with unused office space. Many towns with weak transport links and a slow economy have trouble attracting major businesses. In these areas, it is profitable to convert surplus offices to residential apartments.
There is not enough office space in some major cities to satisfy expected future demand, though this is not down to the levels of conversions. Most of the offices suitable for residential conversion have already been converted. In cities like London and Manchester, modern office buildings are being constructed and these hope to satisfy the high demand for prestige office spaces.
