74% of property developers expect to see an increase in the number of conversions of under-used office buildings into new homes over the next two years as a result of the government’s decision to extend property development rights (PDR) legislation, according to a new study commissioned by Amicus Property Finance.
Of these, 30% of developers expects to see a significant growth in PDR-related conversion schemes, the specialist short term property lender said.
69% of property developers welcome the PDR extension, which was designed to enable thousands of new homes to be built by making use of neglected industrial and office property while preserving the green belt.
In the UK between July 2015 and June 20163, a total of 1,066 office to residential permitted development applications were permitted with prior approval not required and a further 1,480 applications granted with prior approval.
Despite the predicted growth in PDR-enabled conversions, only 4% of property developers believe this will have a major impact in addressing the UK’s housing shortage, with 86% thinking it will help only slightly towards narrowing the gap.
Property developers are also sceptical of the government’s target to build one million homes by 2020, with only 21% believing this target to be realistic.
Keith Aldridge, founder and managing director at Amicus Property Finance, said: “We welcome the government’s extension to the PDR legislation. We have assisted many developers in capitalising on the relaxed planning laws and believe it has played a key role in reinvigorated this part of the market, creating significant opportunity for specialist lenders like Amicus.
“There is clearly a long way to go but it’s certainly a step in the right direction in addressing the UK’s housing shortage.
“We’ve seen tremendous growth over the last few years as our localised relationship-based approach resonates well with clients. We’re continuing to see strong demand among landlords and developers for short term finance from across the UK.
“While London and the South East remain highly popular among landlords we are also increasing interest from other regions such as the Midlands and the North West, which are offering attractive valuations and yields.”