Business, Law & Money Property & Facilities

Why turning offices into homes is a Catch 22 for London

According to a study conducted at the start of the year, more than 7,500 affordable homes have been lost in the past two years in England as a result of office redevelopments bypassing affordable housing requirements. Permitted development rights rule that office buildings can be converted into housing without planning permission, but there is no commitment to building affordable housing as part of these conversions.

London already has a shortage of affordable housing, with mayor Sadiq Khan announcing his intention to increase the pace of construction from 29,000 homes a year to 66,000. On top of this, he has vowed to make 65% of these home affordable, a much higher percentage than the current rate of 38%. However, the city’s rate of conversions of former offices into housing dropped from 873,000ft2 in 2014, to just 178,000ft2 in 2016.

The housing crisis in London is leading to ‘dog kennel’ flats

In order to try and tackle the housing crisis in London, the government took a relaxed approach to planning regulations in order to promote the conversion of underused office spaces. Over the past two financial years, there have been 30,575 homes converted from office blocks, and an estimated 25% of these could have been affordable housing. This means that 7,644 affordable homes could have been created, according to the London Government Association.

Hundreds of tiny, studio flats will be squeezed into former office block Barnet House, with 96% of the 254 flats being smaller than the national minimum space standards for one person. The smallest of these ‘dog kennel’ rooms will be just 16 square metres, which is 40% smaller than an average Travelodge single room. On the opposite side of the capital, office buildings in Croydon have also been converted into tiny studio flats, offering as little as 15 square metres per person.

Converting office spaces discourages businesses

Converting office space into housing also means there are fewer workspaces for new businesses looking to launch in the city. Last year, there were a massive 187,250 new businesses set up in the capital, almost all of which will need some form of office space. Councils are warning that the conversion of office space to housing could leave businesses and startups without physical premises to base themselves in. If office space becomes increasingly hard to come by, the price to let will also increase, leaving startups struggling to have their own office space.

A rising number of businesses are looking to telecommuting as a way to combat the rising costs of office space. In a survey taken at last year’s Global Leadership Summit in London, 34% of business leaders stated that more than half of their company’s full-time workers would be working remotely by 2020. Meanwhile, 25% admitted that over three-quarters of workers would not work in a traditional office by the same year.

Many workspace providers are already operating in the city, accommodating startups who are looking for short-term leases with minimal space. These hot desking workspaces often run through a membership system, such as Landmark’s club space membership, which offers a communal workspace which members can drop in to as and when they need it.

A lack of affordable housing and office space is driving businesses to other cities

Birmingham is quickly becoming the most popular city for startups outside of London, and according to BQ Live, 2017 saw the city welcome 12,108 new businesses. Last year marked the fifth year in a row that Birmingham followed London for the number of new businesses launching in the city, thanks to the abundance of affordable office space, access to global markets, and dedicated support provided to entrepreneurs and small firms.

On top of this, more and more people are leaving the capital because of the lack of affordable housing and workspace, with the number of Londoners abandoning the city reaching a 10-year high. According to recent figures published by the Guardian, 292,000 people left London during the first half of 2016 alone, with many Londoners turning to Birmingham and Brighton for their new homes, thanks to the cheaper cost of living.

While converting office space into affordable housing can be seen as a solution to the city’s growing housing crisis, it also means that fewer businesses have access to affordable physical space. Londoners and entrepreneurs are therefore looking to other cities for homes and office space, as London’s rising prices continue to drive them away.

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