The number of planning applications submitted in England has increased at its fastest rate since the recession began, according to McGrigors, the commercial law firm.

127,098 planning applications were submitted in Q2 2010, compared to 117,989 recorded in Q2 2009, an increase of 7.7% in just three months and the Q2 figure is the highest number since Q3 2008 when 135,000 planning applications were submitted in England.

McGrigors says that the increase in planning applications shows a clear sign of some renewed confidence among developers who are now looking to capitalise on the recent rise in commercial property prices and both commercial and residential rents.

Alex O ’Connor, Partner at McGrigors says: “This is the sharpest increase in planning applications since the start of the recession and it clearly demonstrates resurgent confidence Land values and rents have recovered over the past year, which has spurred an increase in applications. ”

It seems that some developers have a growing appetite to build, which bodes well for the sustainability of the recovery in construction. Central London office rents have recovered dramatically in the last 6 months as demand from occupiers has picked up.

The shortage of office space is predicted by McGrigors to become more acute over the next few years, so developers have to get planning applications in now to meet that demand.*

Yet despite the increase in planning applications, it seems developers are still struggling to get access to finance to begin construction.

Alex O ’Connor says: “Access to finance is still a major hurdle for developers. Developers are increasingly looking for joint venture partners to share some of the risk before projects get off the ground. Unless developers can secure pre-lets or sell large numbers of units off-plan, access to development finance is still very constrained.

“Obviously nobody is expecting the Irish banks to return to the UK property market anytime soon, so how the big UK banks are forced to respond to Basel III is going to be critical. ”

McGrigors also points out that the amount of property public sector occupiers look to sub-let will also impact planning applications for commercial office space over the next four years.

*Research from commercial property agency NB Real Estate earlier this month revealed that office rents in the City of London have rocketed by almost 25% so far this year, the strongest three quarters of rental growth since records began.