The Government’s announcement on 13th October 2015, in relation to the Housing and Planning Bill 2015-2016, has been heralded by property developers, investors, and first-time home buyers as good news.
The Government’s announcement was intended to end potential uncertainty for developers around the permitted development rules, enable the development of new homes to be built faster, and avoid unnecessary red tape and bureaucracy that could slow down future conversions of offices into residential homes.
The planning rule changes fit within the government’s key aims to boost house-building, creating one million new homes by 2020, and making the best use of existing buildings, particularly those which are underused and neglected. Easing the permitted development rights will also protect the green belt.
The British Council for Offices, in their September 2015 Report, estimated that between 3,000,000 and 9,200,000 ft 2 of office space was converted in England in 2014. They estimated that, by using the new planning rules for conversions from offices to residential homes, this has provided 7,600 new homes during 2014 (using the assumption of average sized units of 75 m 2, i.e. typically one or two-bedroom flats).
The Housing and Planning Minister, Brandon Lewis, stated; “We’re determined that, both in Whitehall and in town halls, everything is done to get the homes we need built. Today’s measures will mean we can tap into the potential of underused buildings to offer new homes for first-time buyers and families long into the future, breathing new life into neighbourhoods and at the same time protecting our precious green belt.”
The Good News
Developers also welcomed the announcement that those with permitted development rights who needed to complete office conversions by May 2016, have another 3 years in which to complete the change of use.
• Ian Coomber, head of planning for Stiles Harold Williams stated, “The development sector has been in hiatus for the past six months, with developers unsure if they could meet the strict May 2016 implementation date. This game changer has been well received and we expect the market to be reinvigorated with this announcement.”
• The move has also been welcomed by the British Property Federation. Chief Executive Melanie Leech said, “Any trip through our suburbs soon exposes redundant office space that, with the best will in the world, is never going to be brought back into commercial use. For such situations, this new policy is helpful.”
• Peter Bolton King, Chief Executive of the NAEA stated, “Theoretically, the Government’s decision to bring in this crucial change to planning regulation will provide a much cheaper alternative to new build properties.”
• Planning Minister Greg Clark said, “Patterns of office use have changed as employers prefer large open plan spaces to individual offices and as more and more people work from home. That has meant that there are many offices that have been vacant for years. “This change will make it easy to turn redundant offices into much needed homes. This will replace derelict properties with buildings in good use, contribute to relieving Britain’s housing shortage and give a valuable boost to the building industry.
The Alternative View
• The British Council for Offices (BCO) condemned the planning relaxation. The BCO’s Chief Executive said: ‘“When we released research earlier this year which showed that 56,000m² of office space was converted to residential in England in 2014, we argued that it was time to take stock and consider the impact of the permitted development right. While [it] can certainly contribute towards much needed housing, a cautious approach is required”’
• A report by London Councils, the cross-party organisation that represents the capital’s local authorities, found that to April this year, over 830,000 sq m of office floor space has been approved for conversion since the rule was introduced in 2013, including permission to convert over 100,000 sq m of fully occupied office space. However the permissions granted have so far not proved that it is focused on redundant buildings alone, and that many occupied offices have been vacated without providing new homes.
• Councillor Peter Box, the LGA’s housing spokesman, said: “What was meant to provide a new lease of life for empty offices has, in reality, seen organisations kicked out of their premises so landlords can cash in on the higher rents they can charge for flats and houses.”
• Speaking at a fringe meeting at the Lib Dem conference in Glasgow, Mr Vince Cable, MP for Twickenham, said “. Now you could say, ‘You’re desperate for the housing,’ which we are. But it does mean there is nowhere for small firms to operate, so we are creating the homes but driving out employment, which is perverse, and it just means you are getting terribly unbalanced developments.”
What changes have been announced?
• To make permanent temporary permitted development rights:. Allowing developers to enable offices to be converted into new homes without having to apply for planning permission.
• 3 years to complete the change of use: The trial period for temporary permitted development rights to convert offices into residential homes (introduced in May 2013) was set to expire on 30th May 2016. Those who already have permission to convert offices into residential homes and have not done so yet, will now have three years in which to complete the change of use.
• Permitted development to include demolition and new build: The announcement stated that “rights will in future allow the demolition of office buildings and new building for residential use”. This will be subject to limitations and prior approval by the LPA.
• Introduction of new permitted development rights: To enable the change of use of light industrial buildings and launderettes to new homes (subject to prior approval by the LPA).
• Cancelation of existing exemptions: All existing permitted development right exemptions (which cover areas including the City of London and the Central Activities Zone) will be removed. There are no proposals currently for a replacement exemption regime.
• Transitional provisions to allow for Article 4 directions to be made: The existing permitted development exemptions will not be removed until May 2019. This is intended to give local authorities time to make Article 4 directions over a particular area, reintroducing the requirement for an application for planning permission for a conversion.
• New development orders: Development orders will grant ‘planning in principle’ on land identified in new compulsory Brownfield registers. Developers will still need to make an application for ‘Technical Details Consent’ to the LPA.
• LPAs register of land: The Secretary of State has the power to make a regulation requiring a LPA to prepare, maintain and publish a register of land within (or partly within) the authority’s area (as yet unspecified criteria).
• Proposals on self-build: There are also interesting proposals on self-builds (a local authority could be obligated to find a suitable plot of land for anyone building their own home) and custom house building.
• New neighbourhood planning powers: With regard to the shift of the power from Whitehall to town halls and local people, neighbourhood and local plans will be used more widely in planning decisions.
What are the implications for LPAs?
LPAs are required to prioritise applications for prior approval without fees being levied. If an application is not considered within a six week period, it is deemed to have been approved.
For householder extension permitted development right, LPAs must notify the neighbours that an application has been made for prior approval. If objections are made then LPAs will need to decide whether the impact of the extension is acceptable.
On 12 October 2015, the UK Prime Minister, David Cameron, warned councils that if they did not produce local plans for new homes by 2017, “the government would step in and do it for them”. Speaking about the second reading of the Housing and Planning Bill, Brandon Lewis said: “New neighbourhood planning powers have boosted plans for house building by more than 10%. More than 8 million people now live in areas that have had or will have their say on planning in their neighbourhood, and more areas are coming forward every day”.
Although the legislation is designed to make it easier for old commercial properties to be converted into residential properties, it is still up to the LPA to decide whether prior approval needs to be sought across the three critical areas of transport, environmental contamination and flood risk as well as keeping in mind the neighbourhood and local area plans. This could lead to constraints on the expansion of commercial premises, now also faced with sensitive residential neighbours.
Boris Johnson, the Mayor of London [spokesman]: “The publication of the Housing Bill is an important milestone and the Mayor welcomes the government’s continued commitment to increasing homeownership. The Mayor has been very clear that the most significant threat to London’s economy is the under supply of homes”.
The Second reading of the Housing and Planning bill took place on the 2nd of November and has now been passed to the Public Bill Committee. A third reading stage will take place before it goes to the House of Lords. A full version of the bill can be found under parliament publications.
How can you position yourself to enable your business to not miss out on the opportunities that are resulting from these announcements?
