The recent London property professionals event saw residential experts give their views on permitted development rights.
 
The expert panel was made up of Paul Turton from NatWest, Iain Painting of Barton Wilmore, Richard Barber from WA Ellis and Jon Neale at JLL, who represented the key sectors of the residential property market.

In a presentation that kicked off the forum, it was analysed whether PD rights, office to residential conversions, are developed at the expense of ‘normal’ conversions.

The audience was shown statistics from 2014, where there were 1084 units from normal office to residential applications.  If PD rights were being developed instead of normal office to residential, it was initially expected they would be slightly lower, however results showed it was up 14 per cent on the previous year.

It was also revealed that 8924 units worth of PD applications were submitted in the first year.

Applications within the inner boroughs were also talked about, where it was stated that Westminster has been the main deliverer of office to residential conversions for 18 odd years, where last year from May 2013 to May 2014, 356 units were applied for.

However, Islington, which previously had 45 units as the average number of applications in the last decade, showed a drastic change. During the last year, the total amount of normal to office residential developments stood at zero. In the same time period, the number of PD rights applications hit 26 schemes, set to provide 617 units – a staggering difference from the last ten years.
 
Charles Russell asked the panel where they thought the market would be a year on.

Iain stated that approvals for applications are at a “general flat rate” in London. “We have seen as a practice…a correction in the market last year.”

He added that they “stepped up substantially”, but personally thinks this year it has “flattened out”. This could be due to a lack of supply of land, or “everyone has jumped on the old sites which [have been] hanging around for the last three years”.

It was then asked whether lenders are keen to provide development finance for emerging areas, or if there is a sense of caution in regards to market conditions that have been enjoyed recently.

Paul answered that as a national bank, they would “rather lend to a good developer on an OK site, rather than an OK developer on a good site.”

Jon added that it was about “the quality of the scheme, the quality of the developer”, and not necessarily the location.

It was finally asked: Can the level of demand be met?

When talking about London, Ian stated: “It never will meet the need.”

Iain added that the approvals of PD rights may make a “blip” to get close to meet the level, but concluded: “there are only so many 60s rubbish office blocks in zone three, four, and five and six”.

Iain then made a strong point, stating that the quality of a conversion scheme is “way below” the quality of a new build, adding “my gut feeling…there is a fundamentally different pricing structure of two schemes side by side”.