Applications to convert large offices in London into residential flats have soared since the government removed the 1,500 sq m cap on commercial-to-residential conversions in March, according to new data produced by Knight Frank.
The company’s latest London New Homes Report shows 1,875 homes have been proposed in the last six months, marking the first significant wave of permitted development applications since 2021.
This represents a nearly 20% increase on pre-pandemic levels, where 1,600 homes were proposed in the same six-month period in 2019.
Abigail Heyworth, a partner in development strategy and finance at Knight Frank, said: “The lifting of the size cap on office-to-residential conversions has opened up new opportunities for developers. It enables the industry to make better use of underutilised office spaces and help to mitigate the risk of stranded assets in the capital. London has faced a persistent housing shortage over the years, so the relaxation of area thresholds is helping to close that gap.”
Stuart Baillie, head of planning at Knight Frank, added: “It is clear that the removal of the size cap on residential conversions via PDR has led to proposals for almost 2,000 new homes. This remains only a small fraction of London’s growing housing need. Under the government’s revised National Planning Policy Framework, the London mayor is now tasked with delivering 80,000 homes per year to address the ongoing shortfall. Finding sufficient land to get anywhere near these numbers is going to be extremely challenging. Conversion of redundant commercial properties is surely part of the answer.”
Anna Ward, associate in residential development research at Knight Frank, said: “Our latest analysis shows that the removal of the 1,500 sq m cap on office-to-residential conversions is already driving an increase in applications to convert commercial spaces into homes in some areas of London. This is a welcome boost, especially since housing delivery in the city continues to fall far short of targets.
“However, while nearly 2,000 homes have been proposed, already several applications have been refused on grounds including unacceptable highway impact and failure to provide fire safety information. Additionally, some London councils are looking at measures to limit conversions, creating a narrow window for developers and landlords to navigate the ‘prior approval’ process, which typically takes at least two months.”
