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A prime example of this is afforded by the drive to promote residential development in Britain's inner cities. However much we welcome the trend towards converting warehouses, cinemas, factories and churches into high-quality, high-cost apartments, and however much we like the coffee bars and restaurants that come with them, we have to recognise that there are consequences for the economic well-being of an area. In particular, employment-generating offices and industrial workshops have been forced out of town, to the business parks and industrial estates of the urban fringes.

Local authorities found a solution to this problem in the early 1990s, when planners at the east London borough of Hackney came up with the idea of combining residential and commercial uses within a "live鈥搘ork" space. This concept was later taken up by other London boroughs and cities with large-scale regeneration programmes such as Birmingham and Manchester.

The first unintended consequence of the live鈥搘ork drive was that most of these units were bought by people who did not use them as business premises; they just wanted a larger-than-average home.

The planners retaliated by tightening the constraints on live鈥搘ork units to make them more businesslike. Developers were told to increase the proportion of space dedicated to the work element of the equation, and to incorporate costly office-style features, such as double entrance doors. They even banned developers from applying the word "apartment" to a live鈥搘ork home and forced them instead to use the utilitarian term "unit".

It is not really any business of the planners whether a building the size of a house should be used for working

Dickon Robinson, Peabody Trust

Second unintended consequence: planners are in danger of stifling the very development they are trying to nurture, because demands that a greater proportion of the space in a live鈥搘ork unit be dedicated to business will deter housebuilders from developing.

The reason for this is not so much that it is hard to persuade people to live in their own office or factory, but that it is hard to persuade them to pay extra to do so. The "live" element is subject to council tax and the work to the more expensive business rates. Traditionally, the workspace element has made up about 30% of a unit, but London planners have pushed that up to 50% or more in their bid to make sure that the homes are put to business use.

Third unintended consequence: buyers who do want the units to incubate their embryonic businesses find that they cannot afford the overheads. Dickon Robinson, director of development and technical services with London housing association the Peabody Trust, points out that commercial rates are high and "people who are in a live鈥搘ork unit may not be well able to bear the expense. It is not really any business of the planners whether a building the size of a house should be used for working".

Although the trust has had great success in marketing conventional homes at BedZed, its groundbreaking zero-energy development scheme in Sutton, Surrey, it has encountered more of a struggle to find buyers for the live鈥搘ork units. This is partly because the planners required that 75% of space be for work and 25% for living, which makes the running costs too high for many start-ups. "We are concerned about the level of commercial rates," says Robinson, "because there is not an obvious market for commercial space there. As a result we are looking to get the planning consent modified. We would like the proportions reversed."

There are planners who are aware of the difficulties that developers face in making council diktats work commercially. "Some developers have had difficulty in finding buyers," admits Graham Mitchell, planning control policies officer with Birmingham council. "The more successful schemes in Birmingham have been those in the jewellery quarter, where there are specialist businesses. Live鈥搘ork is reasonably accepted by developers here, but it is generally no more than 20% of a scheme, and the work element is about 30% of the floorspace of a unit. We have asked the government to form a special-use class for this type of building."

But floorspace is not necessarily the biggest problem. Cala Homes is one of the Birmingham developers required to include a live鈥搘ork element in an apartment block. The live鈥搘ork element in its Qube scheme has to use 30% of its floorspace for work, but the developer has had to bear the burden of providing toilet facilities, IT cabling and a separate entrance for the workspace, and it, too, has found selling the units far from easy. "There has not been much live鈥搘ork up here, and the concept wasn't understood by buyers," says Sue Parry, sales and marketing director with Cala Homes Midlands. The company therefore rebranded the units as the Big Apartments and fitted one out as a live鈥搘ork unit. "That started to hit home," says Parry. "What we've had to get across is that this is just a different style of living."

David Broadbent, northern regional chairman of Persimmon Homes, which has developed several live鈥搘ork schemes in London and is carrying out its first in Manchester, is nonetheless optimistic about the future. "It is a difficult area, like anything that's new," he says. "At the moment, schemes are more expensive to build, but in the end they will command a premium."

Broadbent adds that his company will persevere with live鈥搘ork, which he claims can have benefits for residential developers. "The ground floor of a scheme is traditionally more difficult to sell for pure residential, or a scheme may front onto a busy road. Those parts of a building may be less desirable for living in, but they could make perfect business premises."

Others agree that live鈥搘ork has potential. The Peabody Trust's Robinson sees scope to take it into the affordable housing sector, notably estate regeneration. "In the private sector, people can work in a spare bedroom, but people don't have a spare bedroom in the social sector," he says.