Today's post is a planning update, summarising some of the recent and forthcoming changes to planning law and policy.

1. Office to residential conversion rights made permanent

Office to residential conversion rights will be made permanent: the legislation has now been published and will come into force on 6 April 2016. These permitted development rights were due to expire on 30 May 2016 but they are now here to stay. The highlights are:

  • developers will have three years from the date of prior approval in which to complete the conversion;
  • certain areas are currently exempt from the rights, to protect local economies (including London's Central Activities Zone), but these exemptions will be removed from May 2019;
  • a new noise test will be introduced, requiring prior approvals for the noise impacts of nearby commercial premises on the new residential units;
  • developers will need to provide a statement to the local authority specifying the net increase in the number of dwellinghouses proposed by the development;
  • conversions from other types of building (light industrial uses from 2017 – 2020 and launderettes) to residential uses will be permitted;
  • prior approvals will be needed and conditions will have to be met, as is currently the case.

New permitted development rights to demolish office buildings where they are replaced by new residential dwellings (as announced in October 2015) have not yet been introduced, but this legislation is expected to follow later this year.

The office to residential conversion rights are proving popular with developers but have also been controversial because of the resulting loss of commercial and office space and because they do not always require environmental or design quality standards to be met, and they are often not subject to affordable housing requirements.

Please also see our previous blog posts on office to residential permitted development rights.

2. Mayor's advice to London authorities on avoiding the office to residential conversion rights (new SPG for the Central Activities Zone)

The Mayor of London's new Supplementary Planning Guidance (SPG) on the Central Activities Zone (CAZ) was published last week, just days after the legislation confirming the office to residential rights conversion rights, and the SPG provides advice for local authorities in London on how to avoid these conversion rights (amongst other guidance). The CAZ includes a mix of uses, including residential and office use, as well as other commercial uses, cultural institutions and international headquarters and this mix is encouraged by the London Plan policies. In his SPG, the Mayor argues that the removal of the exemptions to the office to residential development rights from May 2019 is likely to increase the number of residential developments in the CAZ and lead to an imbalance in the mix of uses, which would erode the office and business spaces which are "essential to London's economic success".

Local authorities will still be able to apply to the Secretary of State to remove the permitted development rights in their area (with an "Article 4 Direction"). The new SPG sets out the Mayor's advice on putting together an evidence base to support the use of Article 4 Directions. Some local authorities have successfully used these Article 4 Directions to remove the rights in areas which were not granted exemptions originally, for example certain strategically important office and employment locations outside the CAZ in London.

This means that although the office to residential conversion rights will apply without exemptions after May 2019, many central London local boroughs are likely to opt out of the rights, with the Mayor's encouragement, so individual local authority policies will need to be checked carefully.

3. Mayor calls for more transparent viability information (new Housing SPG)

The Mayor of London has published a new supplementary planning guidance (SPG) document on housing, including a section on viability. As explained in our previous blog post on the housing crisis, certain local authorities in London are adopting policies requiring full disclosure of viability assessments with planning applications, especially where the proposed level of affordable housing is below that required by local policy (e.g. Islington, Greenwich and Southwark). The London Assembly have also made recommendations to the Mayor on requiring more transparent viability information across London.

The guidance in the Housing SPG follows the London Assembly's recommendations in encouraging the 'Existing Use Value plus' approach to land valuation, rather than using 'Market Value' or an 'Alternative Use Value', and highlights the importance of transparency of information to maintain trust in the planning process. The SPG also includes guidance on affordable housing viability review mechanisms, amongst other guidance.

The disclosure of viability information is likely to be an increasingly common requirement, and developers are advised to keep confidential information to a minimum in a planning application. The Herbert Smith Freehills will be running seminars on disclosure of information, viability and affordable housing, please contact us for more information.

4. Community Infrastructure Levy (CIL), mezzanine floors and multiple planning applications

If two planning applications for works on the same unit are made separately, to make use of an exemption in the CIL regulations, a CIL payment may lawfully be avoided. In a recent case, the landowner submitted one planning application for a mezzanine floor and a separate application for external works to the same retail unit. The mezzanine floor did require planning permission because it was for floorspace of more than 200 sqm, but the application did not trigger CIL because of an exemption in the CIL regulations for internal works when no other development is included in the application. The separate application for external works did not by itself trigger CIL because no new floorspace was created.

The charging authority (Swindon Borough Council) had argued that if the works in both applications had been contained in the same planning application, CIL would have been payable. Swindon therefore issued a CIL liability notice and a demand notice including late payment interest. The landowner challenged the lawfulness of Swindon's notices.

The court held that the notices demanding CIL were unlawful. As nothing formally linked the planning applications, they could be treated separately thus avoiding a CIL charge. There are certain exemptions and deductions in the CIL regulations which developers and landowners can make use of, to avoid CIL charges in certain circumstances, and this was a lawful use of an exemption.

The CIL regulations are currently being reviewed and changes are expected later in 2016. Legal advice should be taken where the CIL regulations apply.

The case is R (on the application of Orbital Shopping Park Swindon Ltd) v Swindon Borough Council and another [2016] EWHC 448 (3 March 2016).

Read our other blog posts relating to CIL here.