Richmond has been refused an exemption from the Government’s new policy allowing developers to turn offices into flats without planning permission.

People looking to change offices into residential properties will no longer have to apply to Richmond Council for permission to do so when the new rules come into force this year.

The council applied to be exempt from the new policy, but was among the two-thirds of London councils turned down.

The concern was due to the high value of housing in the borough, high quality offices will be converted into flats, potentially displacing businesses and employment opportunities.

It also believes it could lead to the creation of flats that do not meet the council’s minimum internal space or amenity space standards and do not provide contributions to affordable housing or vital infrastructure such as schools.

Labour London-wide assembly member Murad Qureshi said: “These exemptions should be seen for what they are - a Government which trumpets localism whilst once again ignores local concerns.

“It’s extraordinary that Richmond was not given an exemption when the local economy needs all the help it can get. The vast majority of London is at risk of losing the office space that existing small businesses and start-ups rely on to thrive.”

The new permitted development rights proposals are part of the Government’s package of measures Eric Pickles has said will support economic growth but councillors warn they could have the opposite effect in Richmond.

The Government has also proposed changes to planning regulations that would have allowed larger extensions without the need for planning permission and the community consultation that the process historically requires.

After a fight from the council, the Government has included that neighbours can keep the right to object, but that right will be denied to the wider community.

Finally another major concern was the Government’s proposals to allow the change of use of shops for a temporary two year period.

The council says this could lead to the loss of key shops serving local communities to services such as estate agents, fast food outlets and restaurants. Ultimately it could undermine the council’s initiatives to maintain the vitality and viability of the boroughs town and local centres, it was feared.

The leader of Richmond Council Lord True said: “Throughout this whole process we have pressed the Government not to take away a neighbour’s right to comment on an extension that could be 50 per cent, or technically in some cases a little more of a small neighbouring garden in a terrace.

“I am glad we were able to win that fight for people up and down the country and am grateful for the many, many people who sent messages of support for Richmond Council’s stand.

“Instead of what Richmond and most other London boroughs campaigned for, the final result is not what we hoped for. We argued that if a local authority thinks that extending permitted development in gardens is not appropriate for its area, it may opt out.

“I urge the Government; please to reconsider these plans and, if they will not respect localist cases put forward by councils, then enable councils to opt out if they please.”

Councillor Martin Elengorn, opposition spokesperson on environment and planning, said: “Both sides of the council are united in their opposition to these ill-considered top-down changes from Eric Pickles.

“After the council has gone through a careful process to produce largely consensual policies to regulate development in this borough, the Government drives a coach and horses through them apparently in the belief that this would kick-start the economy.”