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From a Tired Suburban Office Into a £7m Residential Conversion

Planning consultant David Kemp, director at DRK Planning Ltd, comments

Art Williams said: “I’m not telling you it is going to be easy – I’m telling you it is going to be worth it.”

Office to Residential Prior Approval
This is often touted as the ‘low hanging fruit’ of the property development world. However, as such rights have been around since 2013, agents and land owners have come to realise they can use it to increase their asking prices, and Councils have become more resistant to it and familiar with the ‘grey areas’ they can exploit to stand in the way of a scheme.

One of the most interesting cases we have dealt with recently relates to the conversion of Fountain House, Leatherhead, Surrey, to 30 flats with parking. The estimated final value of the conversion is around £7m; a value that my client, Westmede Properties Ltd, could so easily have walked away from, as I explain below.

Article 4 & the overall strategy
In September 2017, fresh off the back of another office to residential scheme where we obtained permission for 39 apartments in North London, the client asked me if I was interested in working on another Prior Approval scheme – just one snag. There was an Article 4 Direction due to come in soon.

Article 4 Directions withdraw permitted development rights, which can be especially problematic for office to residential schemes, as some Councils have a policy that seeks to prevent the loss of office accommodation in order to protect the local economy. They normally have to be marketed for use as offices only for at least 12 months in many cases before the Council will even consider a conversion to residential use. Basically, it all but strips any short-term development value from a site, making it really only worth considering as an investment hold for office use. As you can imagine, compared to its value as flats, a suburban and tired old office block in Leatherhead would hardly be exciting in terms of its existing use value and likely yield!

We had to therefore make sure that we obtained any Prior Approval on the scheme before the Article 4 Direction came into force on 16 December 2017. So we worked 56 days back from this date to work out the latest date to submit the application (20 October 2017) and then aimed to submit the application at least 1-2 weeks before this for good measure.

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