In a bid to guard against the homogenisation of central London’s prime districts, Westminster Council (Westminster) has expanded its implementation of Special Policy Areas (SPAs).
The stated purpose behind these SPAs in Westminster is to ‘ensure that unique clusters of activity are not lost to other uses’. According to the guidance issued by Westminster Council, SPAs would be appropriate only in 'specific and exceptional circumstances' and then in only areas with a unique identity, economic function or cultural heritage.
In November 2016, Westminster designated five new SPAs: Harley Street (for medical facilities), Savile Row (for tailoring), Portland Place (for institutional uses), St James’s (for private members’ clubs, art galleries and niche retail) and South Mayfair (for art galleries, antiques traders and niche retail).
This article we will examine how this new planning policy operates, look at how it affects landlords and tenants within or proximate to the SPAs, and assess whether it can actually ensure these unique clusters are not lost to more generic uses.
This planning policy is intended to operate by rejecting applications which would threaten the original and distinctive character of the relevant areas as well as encouraging the growth of the designated uses. The hope is that the initiative not only maintains but enhances the reputation of the specified area.
In St James’, the SPA seeks to preserve the private members’ clubs that have lined St James’ Street and Pall Mall for hundreds of years and which are responsible for the area's prestigious and aristocratic reputation. Westminster has also recognised the importance of luxury retailers in this area, such as the shirt makers, hatters and shoe makers found on Jermyn Street, which are intrinsically and historically linked to the clubs and their members.
In nearby Mayfair, Westminster has recognised the need to protect the hub of the UK's multi-billion-pound art trade. Concerns were raised when it became apparent that Cork Street galleries had been forced to vacate their premises due to the rocketing rents driven predominantly by the arrival of fashion retailers.
The Savile Row SPA acknowledges the street's international reputation as a centre of excellence for high quality, bespoke tailoring. New retail uses which are complementary to the tailoring industry are welcome at basement, ground floor and first floor level, but Westminster is reluctant to allow Savile Row to become another Oxford Street or Regent Street, with huge department shops and flagship stores and associated high footfall. Instead, the SPA seeks to uphold the distinctive character of Savile Row by focusing on smaller, luxury outfits boasting the first class personal service which has been so instrumental in attracting the locality's international reputation for excellence and quality.
Harley Street is globally renowned as the centre for medical excellence and in designating the area as a SPA, the council aims to preserve this reputation. The Harley Street area alone provides over 3,000 jobs in the medical sector and the SPA encourages both the retention of existing medical facilities and the development of new ones. However, the SPA does also recognise that the majority of visitors to Harley Street are not local to the area and, therefore the SPA also permits the development and provision of residential accommodation, provided that its use is limited to patients receiving treatment and their accompanying families.
Finally, the Portland Place SPA recognises and capitalises on the fact that the area is home to numerous headquarters of professional, charitable and cultural institutions, such as RIBA and the BBC alongside many embassies, consulates and trade federations. These prestigious institutions are well suited to the grandeur of the buildings which they occupy and, through the SPA, the council will support similar institutions taking up residency here, in the hope of protecting and fostering London's economic diversity.
SPA - effective or prohibitive
The key question that one might ask is will these SPAs be effective?
What is immediately clear is that the cooperation and "buy-in" of landlords will be key to the successful and effectiveness of SPAs.
Some of the SPAs require landlord actively to market the relevant vacant units within their properties for the designated use for at least one year. However, at the end of that one year if the units are not let then the landlord is free to let as it sees fit. As such, landlords may decide, via a tactical decline of offers, that this 12-months hiatus of rent is worth the long term value of the higher rents and broader assignment possibilities that might be available for those tenants that do not fall within the ambit of the SPA.
What of the relationship between the landlord and tenant?
In the responses to the consultation document released by Westminster, tenants and landlords were starkly divided in their opinions on the SPAs.
The majority of tenants' responses highlight their concern that the current market conditions operate to push out specialised businesses through rising rents. It is their hope that a SPA would provide protection or a respite from this. Landlords, unsurprisingly, took the opposite view since they regard SPAs as an unnecessary restriction on their business.
Landlords, particularly those that own retail units in SPA areas, argue that the Westminster plan exceeds the remit of what planning policy should cover. Their arguments centred on the stagnation of the high street generally and the distortions that planning policy can have on the market.
This potential interventionism is particularly clear in the Westminster City Plan for the St James' and Harley Street SPAs, where additional designated uses may be 'secured by legal agreement when appropriate.' It is not exactly clear what this means and only time with tell.
Some responses pointed out the potential distortions SPAs might cause. For example, a landlord that has a portfolio predominantly let to good tenants for long terms is going to be better off than a landlord that might have a crop of units shortly up for renewal.
It is not hard to see that SPAs will have a distorting effect on rents and rent review, not to mention the unintended consequence of the effect on neighbouring areas that are not within an SPA.
How effective have these SPAs been elsewhere?
It is worth remembering that SPAs have been around since 2003. Hackney Council, for instance, was quick to introduce an SPA in Shoreditch to minimise negative impacts of night time activity. In fact, from reports in 2007, the Shoreditch SPA was relatively well received, particularly by the police and local citizens looking for a balance between revelry and safety in Shoreditch. Whilst this SPA focussed more on increased licensing to reduce impacts such as noise levels, it is the much heavier handed approach on use classes and the selection of a specific type of tenant that has made the Westminster SPA so much more controversial.
Controversy for SPA policies is not new. In 2014, Hackney Council approved proposals for a Special Policy Area to be implemented in Dalston. This SPA created a presumption of refusals for new licence applications for pubs and bars in the area. 85% of the local population opposed this policy on grounds of it being "regressive" and "damaging" and, accordingly, it was not implemented.
The rationale behind Westminster's policy should be applauded because it is important to protect some of the unique aspects of London. What is not yet clear is if SPAs are the appropriate tool with which to do this. It is clear that landlords are already concerned about the implications this has for them and that can have a knock on effect on development and the ongoing success of London. No one wants to see the City preserved in aspic!
This article was first seen in the RICS Journal