Blog | Land & Development | Permitted Development | Residential Development Consultancy

Convert to rent – are permitted development schemes suitable for build to rent?

The market for consented residential development land has been challenging and the process for gaining planning permission long-winded, so it is hardly surprising that there has been, and continues to be strong appetite for office to residential permitted development opportunities.

First introduced as a temporary measure in 2013 to help deliver much needed new homes, permitted development rights enable developers to convert offices into residential developments through a streamlined 56 day prior approval process. According to research by The British Council of Offices, six million sq ft of office space was converted to residential use during 2014 alone, which is considerably higher than the 2008 residential conversion peak.

In October 2015, the Government announced that permitted development rights would be a permanent change to the planning system. As well as facilitating these office to residential conversions, as expected, permitted development consents are also being used as leverage to circumvent dated planning policies and deliver new-build schemes. The attractiveness of permitted development consents is borne out of the quick turnaround time, the ability to deliver smaller units, the disparity between residential and commercial values in certain locations and the fact that there is no requirement to include affordable housing.

Are permitted development schemes suitable for the build to rent market?

The gathering pace of the permitted development market has also coincided with the significant investment in build to rent (BTR) as an emerging asset class. Permitted development sites are increasingly being considered for the private rented sector (PRS), with a number of private developers converting and holding existing commercial assets as residential investments, or investing in new change of use opportunities. Whether the properties will meet all the requirements for BTR investors (versus PRS), in terms of onsite management, amenity, accommodation design and layout, is debatable.

Yet there are advantages; permitted development rights offer greater flexibility in the mix of units compared to those normally dictated by local councils for new-build projects, allowing a higher proportion of studios and one bedroom apartments at yields that support rental product viability.

However, converting offices into BTR developments is not without its challenges, especially if the structure and façade of a former office building doesn’t lend itself to being carved up into bespoke rental properties. Existing commercial buildings are often of a smaller scale and while they may suit PRS development, they are often not of the critical mass typically required to create suitable BTR homes.

Driven by the need to deliver low capital values in a sensitive marketplace, the build to sell market is typically focused on optimising the number of properties within a development. It is therefore no surprise that we have seen numerous well-located permitted development buildings come forward for sale. In contrast, rather than just delivering a high volume of micro units, successful BTR schemes must create bespoke properties that appeal specifically to renters.

Given the tailored nature of purpose built rental properties, it can also be difficult to retro-fit existing buildings to appropriate standards for long-term portfolio hold, particularly for property companies and institutional investors. This varies site by site – although it can be done as demonstrated by Moorfield’s conversion of the former HMRC waterfront offices in Liverpool to develop 240 units at ‘The Keel’. Another prime example of a successful change of use conversion to a BTR scheme is Vantage Point where Essential Living has developed 118 units in a former office block above Archway underground station in London.

The 17-storey existing building provides the critical mass and excellent accessibility, both of which are vital to any BTR scheme.

In this case, permitted development rights allowed compromises with the apartment mix and the affordable provision that would have otherwise provided a more challenging and drawn out process for the developer in their negotiations with the London Borough of Islington. Due to the natural transience of renters and the increasing competition within the market, the quality of the product and amenities is also crucial. The layout and floorplates of the building enabled Essential Living to deliver the optimum number, mix and size of units, as well as high quality amenities and lifestyle perks which are limited in the market, but increasingly sought-after by ‘generation rent’.

The key to any permitted development opportunity is a thorough understanding of all aspects of the development. Is it a PRS scheme or a true BTR opportunity? What design challenges are there to meet the requirements of either sector? How viable or feasible is a retro-fit? Is the rental demand sufficient locally to warrant residential development? What competition is there locally from other permitted development schemes or purpose built large scale BTR or sale blocks?

So, more questions than answers – although, there is little doubt that for the right buildings in the right locations, permitted development has a significant role to play in the BTR sector. With the prospect of limited planning bureaucracy, the opportunity to deliver entirely private schemes and a flexible approach to mix, it hardly comes as a surprise!

 If you have a vacant office building, download our brochure to find out more about converting to residential with permitted development rights.

Notes to editor

Andrew recently joined Allsop from Savills and has enjoyed a 13 year prestigious and successful career in residential development. Having worked for a number of years obtaining residential led planning consents, he has developed a wealth of development expertise and wide ranging knowledge of the market. Andrew commenced his career working for a Local Authority and has extensive experience of advising on estate regeneration and land assembly proposals.

Andrew is the Head of the Residential Development team and part of Allsop’s Build to Rent team. He advises on joint ventures, forward funding arrangements and land deals, many of which are on behalf of public sector or private landowners clients.


If you would like to get in touch with Andrew, please contact him: or +44 (0)20 7344  2609

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