We have a couple of cases where developers have found delays in the purchase of Office (B1a) accommodation with a view to conversion to C3 Residential are now putting developments at risk.
Under the slightly controversial PDR introduced in 2013, developments can go ahead as long as the property is ‘is use’ by May 2016. For some where the purchase is still underway and where there is more than ‘light refurb’ involved this could be tight.
This is exacerbated by the fact that Lenders on such projects are getting understandably twitchy about the potential for the development to have to seek retrospective planning consent if the deadline is not met. Some are now only lending if the project can be completed by the end of December (to give time for over-runs).
A good few people are therefore waiting on news of the extension of this scheme – which has attracted criticism for the loss of office space and particularly diminishing space for small businesses. Pressure has been put on the Government to tighten or cancel the scheme.
‘Word on the Street’ is that an extension will be agreed but with a condition about a number for units that will be offered to the market at a discount as affordable housing. That would lift the deadline but potentially threaten the affordability of some schemes where this affects the GDV. Some believe an announcement is due at the time of the Conservative Party Conference – so watch this space.