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Striking the right balance - Permitted DevelopmentBy: David de Maupeou

David de Maupeou, Pemberton Greenish

As Property News readers 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, in order to enable a 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 any time now, and are to last for an initial period of three years, on the understanding that 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, these new 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 (include for instance, any obligation in relation to the provision 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, which is leading to concerns that communities with inadequate local facilities and infrastructure will be created, particularly where the proposed office conversion is in a business or commercially sensitive district.

Indeed, 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 and which are not offset by positive benefits that these 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, 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, who 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, as borough-wide exemptions will seemingly not be granted.

Clearly if these permitted development rights are 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 said, “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 overzealous in their opposition to these permitted development rights as they do not deprive local planning authorities from controlling a developer’s ability to convert office buildings 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. Hence, developers will still need to involve local planning authorities on larger schemes such as the conversion of an entire office block, for example, before implementing the change of use.

Further, permitted development rights will only permit the change of use itself - many office buildings such as a modern office block (as opposed to a classically designed building) will clearly need external alterations as part of their adaptation to residential use, and any associated building works which would currently require express planning permission (and indeed listed building consent) will continue to do so.

To summarise, 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.

About the author

David de Maupeou is a senior commercial real estate solicitor at Pemberton Greenish. He specialises in the acquisition and disposal of commercial investment property, acting on all aspects of development projects (in particular mixed use schemes) and advising landlords and tenants with regards to leasehold property.

Features May 2013

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