Are changes to the conversion process bad news for commercial property?

Removing the obstacle of planning permission from commercial to residential conversion should be a positive thing. Less red tape, quicker conversions and fewer empty high street premises. The government wins too; increased redevelopment of old buildings and less demand for brand new developments.

With that considered why were 64% of people against the idea when the notion was originally put to councils, businesses, local authorities and individuals in 2012?

The main concern is that while these conversions might, in theory, ease the pressure on residential demand, the cost of commercial space will be sent spiralling due to the lack of availability. As we previously discussed, the high street is undergoing somewhat of a revival across the UK and the commercial property market is showing signs of growth once again.

With agents reporting that commercial property demand is outweighing supply already, the conversion of premises is unlikely to help the situation. What’s more, a knock on effect of this could be a hit to high street retail. If an office of 20 workers is converted to a residential flat, will shops and cafes be missing out on lunch time and after work business?

If this catches on across the country, then we could invariable see a very different looking high street, with residential properties far more prominent than they are now. As stated before, this will surely increase the demand and increase the price for commercial properties, but it could also affect the residential market. If the government is trying to ease the pressure on residential demand by encouraging conversion, it could be mean in a decline in the number brand new housing developments, another area which is already in high demand.

There is also a question over whether the process is actually quicker than applying for planning permission. Change of use now requires prior approval, which still involves analysis of a number of circumstances before conversion can occur, as we explained earlier this week.

Let us know your thoughts on the change of use process. Have you experienced the prior approval process and was it faster than planning permission?

Commercial property owners, would you consider changing your premises to residential? What effects do you think these changes will have, not only on commercial property prices, but also on high street retail and commercial property demand?

More information can be found at the government planning portal website.



  1. Hi Kyle,

    Thanks very much for your comments. We’ve been speaking with a lot of agents recently who are seeing this commercial to residential conversion becoming more and more prevalent, as it can be financially benefical to convert to residential, rather than redevelop an office. As you say, this is a way of addressing the residential supply issue.
    Unfortunately retail is already struggling to hit the same returns as the office and industrial market, so it cannot be good news for retailers to potentially lose office workers at lunch or after work. One agent we spoke with explained that many vacant offices are actually fitted with a now outlawed air conditioning system that is very expensive to replace. Therefore converting these properties to residential was actually the cheapest way to bring use back to these vacant units.
    In terms of desolate areas of cities, something we are seeing more and more is regeneration projects happening across the UK. See our blog on Old Oak Common for an area of London that is about to undergo a massive redevelopment. There has also been wide government investment in new projects to breathe life into different areas of the UK. Of course, we don’t know if these will be able to solve the supply and demand issues that we are seeing.

  2. A really interesting article San and I like the point you make at the beginning about an increased redevelopment of old buildings and less demand for brand new developments. This is one of the key problems with the housing market now. The supply is far outweighing the demand and new ways of meeting this demand need to be thought of. This is one way of addressing the problem. High street retail does remain one of the biggest obstacles. What about areas in cities which have been desolate and unused for years?