Opportunity knocked as council halts office conversions

Croydon’s Labour council is putting its pro-business reputation on the line by calling a halt to the often lucrative conversion of the borough’s empty offices into housing.

Central CroydonLast week, owners and occupiers of office buildings in what the council has called – apparently without intending irony – the “Croydon Opportunity Zone”, received letters from the council telling them that the Town Hall is ending a government initiative to boost run down town centres.

The “Opportunity Zone” runs from West Croydon through to East Croydon, from South End to Wandle Park. Basically, its is that part of central Croydon closest to where Hammersfield will be spending £1 billion to build a shopping centre.

Last year, planning minister Nick Boles, a Tory pal of Boris Johnson’s, came up with a major shake-up of planning law to allow pension funds and multi-millionaire developers  to get planning permission in just eight weeks for changing offices into flats (unless there were flooding, transport or contaminated land issues). “Permitted development”, as it is known in the jargon of local authorities, had previously only been used to allow for modest house extensions or very large greenhouses.

The council letter distributed to landlords in the borough last week

The council letter distributed to landlords in the borough last week which effectively calls a halt to office-to-residential conversions

Boles’ reward for the reform was to be promoted to another ministerial job. Now, without Boles’ hand on the tiller, the government is retreating from the policy.

After a mandatory 12-month process, the policy will be no more in Croydon. There are even suggestions that Labour will use their new landlord licensing scheme to make life uncomfortable for those pension funds and developers who have already secured easy planning permission to convert offices into 1,100 new flats in Croydon town centre.

Senior council figures are openly expressing their reservations about some of the more inappropriate re-developments: “We’re creating modern-day slums,” one Katharine Street figure told Inside Croydon as they scuttled off to their next meeting.

The decision to withdraw the easy-permission facility for conversions also comes in the middle of London’s desperate housing crisis and while there are still large amounts of redundant, old-fashioned offices unfilled in Croydon’s town centre.

The Labour council has itself taken advantage of the more relaxed planning rules to order the conversion of two office blocks near Thornton Heath Pond, to be used to provide emergency social housing instead of paying for over-priced B&Bs over the next decade.

In the town centre, the reform to the planning regulations has seen millions of pounds invested in what were once offices, and the previously depressed commercial office values have as a consequence doubled in the past six months, while creating jobs for builders to strip the buildings to prepare for the new homes.

Delta Point: lacks a tad of what Kirstie Allsopp might call "kerb appeal", don't you think?

Delta Point: bought for flat conversions, but lacks a tad of what Kirstie Allsopp might call “kerb appeal”

Delta Point, the former BT building by West Croydon Station, was bought by Criterion Capital to convert into 404 flats. Carolyn House, opposite the Bridge to Nowhere at East Croydon, was purchased by a pension fund.

As the effects of the recession waned, in central London office rental rates have boomed, creating an office vacancy rate of just 10 per cent, but in Croydon, with its generally older, 1960s office stock and outer London location, the vacancy rate has remained stubbornly at more than 50per cent. Thus the flats conversion policy was a transformative one for a post-riots, depressed Croydon.

Even now, there is still more than 950,000 sq ft of vacant office space in the so-called Opportunity Zone, the equivalent of 150 football pitches. It is unclear who the council thinks will occupy or develop this continuing oversupply and how many developers will take the risk or have the resources to knock down and build shiny new offices when there is still a heavy supply of low-quality, low-rent office space.

The council is contributing to the oversupply itself, with its controversial purchase of Davis House – at a multi-million-pound loss to the Council Tax-payer – and under the CCURV scheme having spent £220 million on building yet more offices in Fisher’s Folly, now intending to let out entire floors of the council headquarters.

Meanwhile, the council is sceptical that those developers seeking to change offices into flats have enough finance actually to deliver on the permitted development that has already been granted to them. With Stanhope intending to put 180,000 sq ft of offices next to East Croydon Station in its Ruskin Square development, even if all the offices with permission to do so were to be transformed into flats, central Croydon will have a massive 500,000 sq ft of office floors still to let.

The Croydon Opportunity Zone, as outlined by the council

The Croydon Opportunity Zone, as outlined by the council

Labour also risks the ire of hard-pressed first time home buyers, struggling to find places to buy or rent.

But the council is worried that too many of the 1,100 flats which already have permission are little more than low quality, high return “studio apartments”, or bed-sits in old-fashioned English, some offering less than 600 sq ft floor space, or just one-fifth the size of a tennis court. Over-populating the centre of town and providing inadequate accommodation will do little to help to rejuvenate Croydon as envisaged in the Hammersfield architects’ drawings, and deterring other investors from coming to the borough.

Looking at the planning permissions that have been given for yuppie tower blocks since the election in May, the Labour council is struggling to get anywhere near its target of providing 30 per cent “affordable” housing. It is worth stating again that the definition of “affordable” housing is supposedly something at 80 per cent of the local market prices: so in central Croydon, where the landlords of two-bedroomed purpose-built apartments are charging around £1,600 per month, rent for an “affordable” flat might start north of  £14,000 per year.

The council hopes that it might be able to leverage some social housing out of the “permitted” developers. They are also looking for more in the way of Section 106 money, a tax that developers normally pay towards the costs of improved public infrastructure near their development.

Developers will likely have questions to ask when they attend the latest bun-fight organised by the council’s preferred PR company, Grey Label, at the Fairfield Halls tomorrow. “Live Croydon” is a half-day “conference”  – or council sales pitch for the borough – for which delegates are expected to cough-up £174 each, or about £35 per delegate per hour for the pleasure of listening to council leader Tony Newman and his merry band of councillors.

The conference organisers don’t even try to disguise the fact that delegates are paying cash to get access to the borough’s elected representatives and professional council officials. Live Croydon, Grey Label boast, “… will provide a unique opportunity to meet the new administration and find out how … its planning team will seek to enforce quality control over existing and new housing stock”.

They add: “There will be a drinks reception at the end of the day … providing the opportunity to network with the key Croydon stakeholders”. In Croydon, money can buy influence, under Tory or Labour councils, it appears.

The developers who attend will be keen to get value for their money and truly understand the motivation for the council’s attempt to snuff out the office to residential market before it’s really started.

Read the council’s September 10 letter to developers by clicking here: Croydon council letter re office to residential

Coming to Croydon

Inside Croydon: Croydon’s only independent news source, based in the heart of the borough: 407,847 page views (Jan-Jun 2014) If you have a news story about life in or around Croydon, a residents’ or business association or local event, please email us with full details at inside.croydon@btinternet.com

About insidecroydon

News, views and analysis about the people of Croydon, their lives and political times in the diverse and most-populated borough in London. Based in Croydon and edited by Steven Downes. To contact us, please email inside.croydon@btinternet.com
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4 Responses to Opportunity knocked as council halts office conversions

  1. davidcallam says:

    Where is the thought process behind this decision?

    By all means prevent developers from creating rabbit hutches by insisting on minimum floor areas for conversions. The council could even adopt the new Parker Morris standards suggested by London Mayor Boris Johnson which would result in some spacious accommodation in the town centre.

    Taking more office space out of the market would make that which remains more valuable. It might make the council’s letting of floors in Bernard Weatherill House more likely and more lucrative.

  2. The councilors will be unhappy with the premitted development because it allows the first time buyers (via the developers) to pay less tax than if the homes were subject to the same S106 criteria as new builds.

    Also when you say that that council has a target of building 30% “affordable” housing; you forget to mention that the council does build properties and simply passes this on via the planning regulation (Section 106 )to the purchers of new housing. This additional tax just makes housing (including renting) more expensive by creating a shortage of properties.

    The councillor then complain that the developers creating “modern day slums”. If these homes are targetted at the lower end of society why are you taxing them so highly? If the councillors actually wanted

  3. If the councillors wanted to improve the life for there residents they would be increasing the supply of accomidation by granting easier planning permission and reducing the Tax (including affordable homes tax) on developments to ensure that supply and demand are in balance.

    In the short term it will increase the profit for developers but will improve quailty of build and increase house building. Market forces will deal with the afffordabilty issue once there are sufficient properties.

  4. Pingback: From Terry and June to Mark and Jez: what is Croydon and where is it going? | A Fighting Truth

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