Hybrid working has reshaped office demand, with many secondary offices now being converted into everything from student accommodation and hotels to laboratories and flats.

Adrian Sheehan is head of real estate at BRM

According to CBRE, nearly £3.5bn of office stock – 5.9m sq ft – was sold between 2022 and 2024 for repurposing. In London, residential leads conversion projects. In Oxford and Cambridge, life sciences is prevalent. In Birmingham, the dominant alternative use has been education. And in Edinburgh, it is hotels.

For landlords and developers, the commercial prospects of converting offices are clear, but the legal pathway is not straightforward. Planning regulations, covenants, leasehold issues and licensing can all delay or derail a change of use.

Certain building works and changes of use can be carried out without a full planning application using permitted development rights (PDR) – effectively a national grant of planning permission. The key right enabling office- or retail-to-residential conversions falls under class MA of the Town and Country Planning (General Permitted Development) (England) Order 2015, which was amended in 2021 to make this route more flexible by removing the 1,500 sq m cap and requirement for the building to be vacant for three months.

Out of office: Guild Tower in Preston is one of the many outdated secondary office blocks across the UK earmarked for repurposing

Class MA is a powerful tool that permits change of use from class E (commercial, business and service uses) to class C3 (residential dwelling houses), subject to conditions and prior approval. Eligible properties include offices, shops, restaurants and gyms. But PDR do not apply to listed buildings, designated areas such as national parks or special protection areas, or conversions to homes in multiple occupation (HMOs). Alterations such as adding windows or doors also usually require separate planning consent.

Converted properties must also meet a myriad of building regulations, including fire safety, ventilation, accessibility, energy efficiency, adequacy of natural light and minimum size standards. Older office buildings may fall short and retrofitting can be costly, especially for specialist buildings such as life sciences assets. Title issues are another common pitfall, with restrictive covenants prohibiting non-office use or easements limiting redevelopment. Leasehold complications can also arise, especially in multi-let assets.

Environmental requirements

Environmental compliance is also critical, but requirements differ depending on the building’s intended use. For residential properties, domestic Minimum Energy Efficiency Standards (MEES) regulations apply, requiring a minimum Energy Performance Certificate (EPC) ‘E’ rating to let, unless an exemption is in place. For commercial properties, non-domestic MEES also require a minimum of ‘E’, although the assessment methodology is more complex. Understanding the standards is vital, particularly in light of government plans to raise minimum EPC thresholds in the coming years.

Then there are financial obligations. Payments due under Section 106 agreements and Community Infrastructure Levy charges can affect viability. These vary by local authority and must be factored into early feasibility assessments.

Finally, sector-specific regulations may apply. Hotels require licensing and must meet hospitality standards. Student accommodation may need HMO licensing. Labs must comply with biosafety and health regulations.

Education providers face Department for Education or Office for Students rules. Each brings its own legal framework.

We have seen strong client interest in office conversions locally and nationally, and our real estate team advises clients on how to use specific PDR for conversion from commercial, business or service uses to residential, without the need for planning permission. But buyers must conduct thorough legal due diligence before committing, addressing all laws and compliance requirements. That means working with legal professionals experienced in repurposing so projects are commercially and legally sound.

Adrian Sheehan is head of real estate at BRM