From office to home – Balancing new rights of Permitted Development

9 March, 2013
by: Cripps Pemberton Greenish

As many will be aware, in late January of this year, the Department for Communities and Local Government (DCLG) announced its intention to extend permitted development rights.  This was to enable change of use of a building from B1(a) office use to C3 residential use without the need for express planning permission (as is presently the case). 

These new permitted development rights are to be brought into force in the spring of this year, and are to last for an initial period of 3 years. Towards the end of that period, the government intends to review whether to extend these permitted development rights indefinitely.

The government clearly sees these new rights as not only promoting economic growth, but also helping to ease the nation’s housing crisis by “recycling” empty office buildings found in many town centres across Britain.  “These changes are about cutting red tape and ensuring that developed plots of land and existing buildings are put to the best possible use” the DCLG is quoted as stating.

Indeed, this is also reflected by market sentiment.  The appetite for converting offices to residential property is seemingly at its highest for decades – perhaps indicative of the fact that office investments have on the whole been performing less well, while there has never been higher demand for residential property.

However, while these permitted development rights clearly bring the potential for development opportunity, there is also a concern (expressed primarily by local authorities) that they go too far in abandoning key principles of planning control.  This is because, on the face of it, permitted development rights could potentially lead to residential development taking place free from any size or quality standards, and free from any of the usual developer obligations that would normally be imposed through section 106 planning agreements. The latter could, for example, include the important obligation to provide an element of affordable housing.  Consequently, there appears to be no mechanism by which a local authority could reduce the impact on local resources arising from such changes of use.  This raises concerns that communities with inadequate local facilities will be created.

Local authorities do not seem willing to take the prospect of these new rights lying down and have been quick to apply for one of the two express grounds for exemption laid down by the DCLG.  These are either that such rights in a particular area will lead to either (1) the loss of a nationally significant area of economic activity; or, (2) substantial adverse economic consequences at the local authority level which are not offset by positive benefits that use changes would bring.

All but three of London’s 33 local authorities have sought either an entire or partial exemption from the new permitted development rights under one of these grounds, according to research by CBRE (the deadline for applying for such exemption was 22nd February). In particular, Kensington and Chelsea, the City of London and Westminster Council have applied for exemptions.

As confirmed in a letter from DCLG’s chief planner to local planning authorities, local authorities have been left in no doubt that applications for exemptions will only be granted in very exceptional circumstances.  This has been further endorsed by Nick Boles, planning minister.  He has confirmed that all applications for exemptions will be reviewed strictly in accordance with the grounds for exemption laid down by the DCLG and has required authorities who have applied for exemptions to identify specific areas within their control that could be prejudiced by the proposed permitted development rights. Clearly if the proposal is to have any real impact, exemptions which are granted have to be kept to a minimum. As Liz Peace, chief executive of the British Property Federation has also commented, “Creating new homes from vacant buildings makes perfect sense. However, for the policy to mean anything, any exemptions should be few and far between.” It is understood that all applications for exemption will be considered by the end of May.

However, councils are perhaps being over zealous in their opposition to these permitted development rights.  They do not deprive local planning authorities from controlling a developer’s ability to convert office blocks to residential accommodation in its entirety.

For one, these permitted development rights will be subject to a prior approval process covering significant transport and highway impacts, and development in areas of high flood risk, land contamination and safety hazard zones. Developers will still need to involve local planning authorities before implementing the change of use although this would not amount to a proper assessment of all of the impacts of the proposed change, in the same way that an express planning permission would.

Further, permitted development rights will only permit the change of use itself – many office buildings will clearly need external alterations as part of their adaptation to residential use.  Any associated building developments which would currently require express planning permission will continue to do so; albeit for these new permitted development rights to be effective, local planning authorities should not be entitled to seek to use applications for such permissions as an opportunity to resist the new change of use regime by way of an alternative means.

Overall then, the DCLG’s intention to extend permitted development rights is welcome from a number of perspectives: promotion of economic growth and mitigation of a seemingly irreversible housing crisis are two such examples and arguably reflect the market sentiment to seize upon redevelopment opportunities.  However, for these to work, local planning authorities will need to be kept in check to ensure that they do not succeed in resisting change. It will be interesting to see how this situation plays out over the coming months.