I revealed yesterday that the government was set to make it easier for companies to convert offices into residential without seeking planning permission.
But it turns out that the business secretary has also carved out other exemptions to the rules – which are likely to be announced later this week- so that they will not apply to shops, hotels or industrial parks.
Meanwhile any council will be free to appeal against conversions where they are able to make an “exceptional case” that the change would be bad for employment in their area.
Mr Cable had fought the proposals on the basis that they could damage employment while giving undeserved windfalls to property developers.
“There has been a really major battle over this, the issue is very controversial in government as well as outside,” said one senior government source.
The changes are to be announced by Nick Boles, planning minister, after strong backing from chancellor George Osborne, prime minister David Cameron and head of strategy Oliver Letwin.
But they were opposed by some business groups including the Federation of Small Businesses.
However one Tory aide said the compromises were due to lobbying by external groups such as the City of London rather than an internal coalition spat. “This isn’t something where the Lib Dems should get the credit,” he said.
The controversy surrounds the fact that once offices are turned into residential property, which has a higher value, it is very hard to convert them back again – if and when demand for office space picks up.
Patrick Michell, a partner from architects Platform5, predicted a “gold rush” of developers seeking to transform “small contentious sites” without the hassle of having to go through authorities.
But Mr Michell said it ought to be up to local authorities to decide what was appropriate in their area. “They seem to be moving away from localism and towards just wanting big infrastructure whatever the locals think,” he said. “Change of use is a blunt tool to counter localism.”
The City of London is among some parts of the country which can expect to win immunity from the changes on the basis that they represent unique office districts.
Sir Edward Lister, Boris Johnson’s deputy mayor for planning, said City Hall was “broadly in favour” of a relaxation of change-of-use rules, though not in the City of London or Canary Wharf. “The City hasn’t got the kind of infrastructure for this sort of change and it could damage the City brand.”
Westminster City Council said on Tuesday that it too deserved exemptions to prevent the “destruction” of business communities.
“The government is being a little naïve on this issue,” said Robert Davis, deputy leader of Westminster City Council. “In commercial areas like Westminster we are successful largely because of businesses. To allow offices to convert to residential, you are going to lose the heart and centre of business.”
The changes could also undermine councils’ insistence on new developments having a certain proportion of affordable homes, Councillor Davis added.
The Royal Borough of Kensington and Chelsea also indicated that it would seek an exemption from the new rules. The borough, which includes some of the most sought-after residential property in Europe, said: “We have a good case for exemption and will be putting evidence forward to support our case,” a spokesman said.”
Property developers said the change of rules would likely have an impact,
particularly on the London market, in terms of bringing developments