Property planning rules to soften

More new homes should be created as a result of the new rules

Measures to make it easier for firms in England to convert commercial property into private dwellings are to be announced by the government in the Budget, the BBC has learned.

Developers will not need planning permission in a move ministers say could create up to 250,000 additional houses or flats.

Sources say the plan could save £140m in red tape costs over 10 years.

Last year only 129,000 new housing only units were built in England.

It is the lowest peacetime figure since 1923, while at the same time between 7-9% of commercial properties lie vacant.

The proposal, which the BBC understands will be announced in next Wednesday's budget, aims to boost home construction and encourage first time buyers back into the housing market by making it easier for developers in England to convert commercial properties into private houses and flats.

The plan which would require a change to the current planning legislation.

The British Property Federation welcomed the plan to soften the planning rules for developers.

Housing shortage

"Whilst clearly we would not want to see property that might still be capable of sustaining jobs taken out of commercial use, there are many places where business will never come back and it makes huge sense to look at alternative uses, particularly residential where there is a massive need for new sources of supply," according to Liz Peace, Chief Executive of the BPF

The Home Builders Federation declined to comment on the suggestion - saying that they represented firms that built "new" rather than converted homes.

Henry Pryor from HousingExpert.net said the plan could be the most controversial change to the planning system since the War though a "potential solution to the acute housing shortage we have at present".

Mr Pryor said it could lead to speculation in certain types of property as well as in shares in commercial property firms.

"It might drive a coach and horses through the existing planning system," he said.

The plan, which would not apply to shops is expected to be up and running before the end of the year and has been welcomed by the British Property Federation.

The government says that next week's budget will be primarily focused on on job creation and growth with the majority of the proposed cuts worth an estimated £83bn announced already in last autumn's Spending Review.