LONDON, June 16 The City of London said it was concerned about government proposals to relax planning rules that restrict shops and offices being converted into residential developments, in a bid to ease Britain's housing shortage.
"If implemented, the impact on the City of London will be disastrous," said Peter Wynne Rees, a planning officer at the Corporation of London, which runs the City of London district of the capital, an area with few residential properties.
"The City would no longer be a commercial district and London would loose its role as a world financial centre."
The government plans involve freeing up more land and buildings for residential development and conversion.
Finance minister George Osborne said in his budget in March he wanted to cut much of the red tape that prohibits converting commercial property into homes, with the government proposing that if all long-term unoccupied office space was converted, 250,000 homes could be delivered.
"Our hope might be that this would encourage more change of use from commercial to residential. If you look at the amount of land that is around, there appears to be a high potential," said a senior official at the Department of Communities and Local Government (DCLG).
This came hot on the heels of government plans to sell public land worth an estimated 10 billion pounds, after housing starts have fallen to record lows.
The Home Builders Federation estimates a shortage approaching 1 million homes in England, and forecasts 232,000 homes need to be built annually to close the gap, with just 100,000 homes built at present.
Developers widely welcome the move to ease planning regulation, with London's residential property values expected to undergo a sustained rise according to the head of property investor Quintain Estates and Development's .
A spokesman at residential landlord Grainger said: "It makes sense to be more flexible and try to release unused vacant stuff that has just been sitting there for decades potentially and turn it into housing that we need.
He noted office space purchased in London's trendy Shoreditch area in 2005 is finally being converted into flats, after lying empty for over a decade.
"If you look at high streets that have vacant office space about retail space, those could become good flats," he said.
Industry participants are mindful of potential dangers, such as the mushrooming of residential developments destablising prices and current projects in the pipeline.
Other issues raised include the desirability of housing estates in the middle of industrial estates, related infrastructure around the conversion of heavy industry buildings as well as noise and traffic problems.
"The crucial thing is, is it going to be possible to put safeguards in place in a way that will be clear and can be applied nationally ... so there is no ambiguity," said the senior official at the DCLG.
The government will reach the end of its consultation period at the end of June with an announcement from ministers possible as early as autumn.