Last week Sadiq Khan raised concerns that many jobs were at risk in London due to permitted development rights (PDR), which allow developers to convert empty office space into residential accommodation without the need for a planning application. These rules were written into the system permanently in April.
“Of course we need new homes, but this does not need to be at the expense of the space we need for the businesses that provide our jobs and drive our prosperity,” Khan said on Friday.
However, a commercial finance specialist believes that this move may be misguided and put lenders off financing permitted development projects.
“Across the board policies often fail to reflect local demand and supply issues,” said Adrian Dadds, director of St. George’s Finance.
“From a lending point of view, uncertainty is never a good thing.
“If lenders perceive there are potential problems on permitted development schemes then it will make it more difficult to raise funding without planning being in place, which then undermines the whole point of PDRs and builds in more delays and costs to developers, which can’t be a good thing when there is still a huge housing shortage in London.”
Dadds said that he recently had a client in West London who had planned to convert offices for residential use but decided to retain the building for commercial purposes, as a lack of office space was driving rents up, making it a more profitable option.
Khan also announced his intention to focus on affordable homes on publicly and privately owned brownfield land and to change the London Plan to allow for business start-up spaces in housing developments.