Do micro-flats have a future once PDR has run its course?

One of the benefits for developers of converting office buildings under permitted development rights (PDR) is that they are not subject to the same space standards that apply to new-build schemes.

Developers are able to deliver smaller so-called ‘micro-flats’. However, the number and quality of conversion opportunities is diminishing and some councils are putting a stop to PDR completely in an effort to prevent further loss of office space.

Advocates of micro-flats are therefore pinning their hopes on a review of space standards that the government promised in the housing white paper. However, not everyone agrees that the regulations should be relaxed.

So what does the future hold for micro-flats now the use of PDR is waning?

At the moment, there is strong interest in smaller flats, or ‘compact living’, particularly from graduates and young professionals.

“There’s enormous demand,” says Martin Skinner, chief executive of Inspired Asset Management, which secured £61.1m in development finance last month for the company’s biggest scheme yet, Impact House in Croydon, which will include 197 micro-flats. “They can be built in quite central locations and compete with other use types in terms of values,” he adds.

Each one-bed flat at the PDR development will be 30 sq m in size - compared with 39 sq m for a new-build one-bed flat - and will cost £300,000.

It is not just first-time buyers who are keen on micro-flats. Renters are also happy to sacrifice space in exchange for paying less, according to Platform_’s chief executive Jean-Marc Vandevivere. His firm has delivered 580 flats to rent under PDR that are 15% to 18% smaller than would be allowed in a new-build.

“We can see that renters are making the trade-off of having smaller homes in return for a professional management service, concierge and amenities. They are even ready to pay a premium,” he says.

Wholesale changes ‘unlikely’

An unusual situation enabled The Collective to develop micro-flats at its Old Oak scheme. It initially had a student consent for the 323-flat scheme in Old Oak and then converted it to co-living via the ‘sui generis’ planning use class. The company is now lobbying for special dispensations in the planning system to make it easier for co-living specialists to develop smaller flats in recognition of the shared space they provide.

“We are working closely with local authorities and the Greater London Authority to help them create policy that can make it easier to navigate planning to create good-quality, diverse housing options,” says planning and design manager Ollie Spragley.

Micro-flats rely on a very niche occupant demographic - Iain Murray, LIV Consult

However, there is likely to be strong opposition to any attempt to relax space standards or ease planning rules and not just from politicians.

Iain Murray, managing director of build-to-rent consultancy LIV Consult, says: “I’m not a fan [of micro-flats]. They rely on a very niche occupant demographic, and in a narrow timeline in their lives.”

Another residential expert, who asked to remain anonymous, says the proliferation of micro-flats could create a scandal similar to the one seen over houses being sold as leaseholds.

“Dorm rooms for adults is so wrong. There need to be some consumer protections in place - that way the next leasehold scandal is headed off before it is created en masse,” he says. “If there was consensus on standards then small [flats] can be useful to the mix, but it has to be regulated and restricted to make sure it’s cheaper forever.”

Lucian Smithers, sales and marketing director at affordable housebuilder Pocket, says he believes wholesale changes to current rules are unlikely.

“I think it will be quite ring-fenced because it will get quite a lot of pushback,” he says. “It would have to be in extreme cases because people are confident in the work that has gone into the space standards.”

With PDR opportunities running out, the next year will be crucial for the future of compact living. While in office, former housing minister Gavin Barwell spoke a number of times of the need for less regulation on flat size. It remains to be seen whether the issue is as high on the agenda of his successor Alok Sharma.

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