How Luxury Home Developers Could Run Rampant In Covid-Hit City Centres

Office blocks and shops left empty by the pandemic could soon see cities transformed into ghettos of unaffordable luxury homes thanks to a government-backed loophole, according to housing experts.

Housing secretary Robert Jenrick in March laid out an extension to existing permitted development (PD) rights that will allow the conversion of empty retail units into “much needed” homes without the need for planning permission.

Under the planning system, any development of more than 10 homes has to include a percentage (up to 50%) of “affordable” housing – it could be social rent, shared-ownership or the often misleading “affordable rent”, which is 80% of market level.

Existing PD rights for office blocks have already seen developers run riot in London, and with more set to be abandoned by firms turning to home-working – plus the extended powers for commercial units – housing experts fear the worst.

Diarmaid Ward, Islington Council’s housing lead, says the reforms are “just a way of circumventing the planning system” so developers can evade regulations around building genuinely affordable homes.

In his north London borough there are 14,000 households on the housing waiting list and in 2019, the council won a landmark case against a developer who tried to avoid the 50% affordable housing quota over a site of luxury flats converted from offices. 

“The new rules will be a complete disaster for all the people who desperately need a secure and genuinely affordable home,” he tells HuffPost UK. “It’s as if they are set up deliberately to stop us from building homes for these people.”

The reforms would mean councils can only turn down applications on very limited grounds including flood risk, noise pollution and inadequate natural light. 

Jenrick said the relaxation of planning restrictions will help high streets severely impacted by the pandemic to “bounce back”.

“By diversifying our town and city centres and encouraging the conversion of unused shops into cafes, restaurants or even new homes, we can help the high street to adapt and thrive for the future,” he said. 

Almost 350,000 new homes need to be built in England per year until 2031, according to a 2018 study by Heriot-Watt University. Of those, at least 145,000 need to be affordable homes, including 90,000 for social rent.

But Ward says while councils have to “fight tooth and nail” to find the funds to build homes for families who need them, developers “are given a carte blanche to do whatever they want”.

He continues: “We’ve got a government that is obsessed with ideological purity and the idea that if you leave things to the free market, they’ll sort themselves out. We know that in London that’s not the case – the free market has not magically sorted out the housing crisis.”

As calls grow to make remote working the default in Britain and companies move to downsize or close expensive offices, Ward agrees that empty commercial spaces could be a viable option in some cases.

“It depends on the context,” he says. “As long as those spaces aren’t being currently used to provide local jobs for local people, then there are certainly circumstances where commercial buildings could be converted into residential homes – and that will be beneficial if they were converted into social rentals.”

But turning office spaces into luxury homes will have a detrimental impact on local communities across the UK. He adds: “Town and city centres are the lifeblood of a community, so unless we turn these spaces into the right kind of social rent homes, we’ll be creating a dormitory city for the richest.

“There’s an awful amount of work that would need to go into converting commercial premises into residential homes. There isn’t government funding available for local authorities to buy up empty buildings so there are already obstacles before you even start.”

Royal Institute of British Architects (RIBA) president Alan Jones also believes the government’s PD rights “free-for-all” will have “severe consequences” for high streets across England, and could result in an onslaught of substandard homes.

In a statement, he said he was “seriously worried” about the new planning rules.

“These new freedoms are dangerously relaxed, and lack critical safeguards to prevent further damage to suffering high streets by turning essential community amenities into, all too often, substandard homes.

“We urgently need well-designed, mixed use developments that provide long term value for their communities and residents, delivered by sufficiently resourced local authorities – not a race to the bottom.”

Fears about the standard of housing that may result from these conversions reference the “nightmare” example of the Essex town of Harlow, where families have been crammed into “human warehouses” of former office blocks.  

Chris Bailey, campaigns and policy manager at the campaign group Action on Empty Homes, believes PD rights have not merely worsened the housing crisis by restricting the availability of affordable and social homes but are a license for “unscrupulous” developers to take advantage of desperate people. 

“We know some of these conversions have been used to house people who are entitled to social homes in extremely poor conditions,” he tells HuffPost UK. “There are some really nasty and terrible cause célèbre examples of that where people have died and their bodies have not been found for weeks.” 

Ward agrees. “These rules could be a charter for developers to go in and stick a few beds in an office building. A family in desperate need should not have to live in an office with a few beds, they need to live in a home. It’s complete nonsense.”

The Ministry of Housing, Communities and Local Government (MHCLG) has insisted homes built under the new system will be subject to high standards and meet space standards. 

The problem isn’t that the government isn’t building homes, it’s that they are building the wrong ones. “The government talks a good game on giving people’s homes and getting people on the housing ladder but actually what we’ve got is fewer people than ever owning their own home,” Bailey continues. 

“It’s a failure of housing policy that we are spending billions of pounds on supporting deposits and propping up housing prices when there’s a never-ending list of people who are in desperate need of homes and who are entitled to social housing in this country. We should be spending those billions of pounds on building genuinely affordable and social homes, then some might be able to afford to save for those deposits.”

“The government will get away with having fewer genuinely affordable homes being built and it will merely exacerbate the existing terrible housing crisis,” Ward adds. “The only way to solve this crisis to make sure we build the right type of homes.

“This is the biggest issue facing us in Islington, in London, in this country.”

A MHCLG spokesperson said: “We are overhauling the planning system to give communities more control from the start of the planning process.

“These changes to Permitted Development Rights will help support our high streets by removing eyesores and transforming unused buildings into much-needed new homes.”

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