Permitted Development (PD) Rights, allowing offices to be converted into residential properties, are set to be extended by the government in the Housing and Planning Bill.

The temporary rights were due to expire in May 2016, but the government will now introduce permanent rights to allow the conversions, providing that the external dimensions of the building stay the same.

Melanie Leech, Chief Executive of the British Property Federation, said: "We have long championed the extension of office to residential permitted development right, believing the policy to be a useful tool in breathing life back into underused commercial space.

“The policy was never designed to deliver a huge number of new homes, but any trip through our suburbs soon exposes redundant office space that, with the best will in the world, is never going to be brought back into commercial use, and for such situations this policy is helpful.

"We support the decision to keep current exemptions in place, as this is not a one-size-fits-all policy, and thriving commercial areas such as the City of London should be protected."

Broker Adapt Finance has been a supporter of PD rights throughout this period of uncertainty.

It continued to offer products when a number of brokers and lenders withdrew theirs - fearing that the rights would expire.

Jordan McBriar of Adapt expects brokers to move back into the sector, but believes that Adapt has now cornered the market.

Jordan said: “Competition is always rife amongst brokers, but we knew this day would come and therefore believe that the lenders, clients and other brokers in fact will continue to support us as we have worked tirelessly and under immense pressure over the last 6 months when everyone else put a halt to their PD appetite.”

“Coupled with that, we will be continuing to support the lenders who had the same foresight as us as they allowed our clients the opportunity to take full advantage of PD when others couldn't support them or indeed us.”

Roma Finance also expects to see a wave of developers looking to take advantage of the extension, particularly because of the quick turnaround time.

Scott Marshall, Operations Director at Roma, said: “The specialist funding industry has been campaigning for this for a while now, and to see the government make this permanent is fantastic, particularly as the pilot worked so well.

“Office conversions are a very valuable source of new housing, allowing creative use of space by entrepreneurial property developers and architects.

“What’s interesting here is that this sort of change of use can happen quickly, in most cases much faster than building new stock on brown field sites from scratch.”

Laura McCauley of Imperial Blue Finance added: “This country still needs affordable housing urgently! 

“We are working with several developers who have struggled with PD in the past, and we aim to continue to do so now that the rights have been extended.

“By getting rid of the eye-sore, derelict buildings, we are increasing demand for better quality office buildings.  It’s only a matter of time before the scales tip back towards commercial development.”

Lender Regentsmead said developers should be able to enjoy the benefits of PD rights, but warned that the right balance needs to be found.

Ashley Ilsen, New Business Executive at Regentsmead, said: “It’s good to see this has been extended and many of our developers are taking advantage of PD.

“Conversely, this could go too far and create a shortfall in office space, driving up rental prices and costs for businesses, and so the right balance has to be met depending on where the developments are taking place.”

News of the extension has not been met with universal praise.

The Local Government Association (LGA) fears that small businesses could be evicted allowing landlords to take advantage.

Councillor Peter Box, LGA spokesman, said: "This temporary policy was designed to provide a new lease of life to empty offices but some councils have reported some existing businesses being evicted so landlords can cash in on higher residential rates and sale prices.

“Not only has this led to less of some of the office space needed for economic growth it has, in some cases, we have seen it replaced with homes which do not meet community needs and remain unaffordable”

The government has also come under fire from the Labour Party, saying it should have acted sooner.

John Healey, Shadow Cabinet Member for Housing, said: “For years the government have been promising action but haven’t delivered. This failure across the board has meant five years of higher rents, more homelessness, home-ownership falling every year, and the lowest rate of house-building since the 1920s.”

The government said that between April 2014 and June this year nearly 4,000 conversions were given the go-ahead using PD rights.