After much speculation, the end of 2015 brought confirmation from the Government that the permitted development right for the conversion of office to residential use will be made permanent. This is consistent with the Government’s oft-stated commitment to kick start new housing delivery.
As traversed in the Spring 2013 edition of the Bulletin, the permitted development right was first introduced in early 2013. It has been popular with developers as an opportunity to create residential units without the need for a planning application and free from affordable housing obligations or other financial planning obligations. More recently, developers have been reluctant to commit to such conversions because the existing provisions require the residential use to have ‘begun’ by May 2016, which (amongst other practical difficulties) has given rise to concerns over its interpretation and has presented issues in obtaining funding for these projects.
Whilst the detail of the extended permitted development right is not yet available, it is fair to assume that this will be predicated on substantially the same terms as the existing right (ie subject to local authority approval of transport, contamination and flooding impacts and with a requirement to complete within three years of the approval). It is anticipated that, under the new regime, any projects which have already been approved will have until 2019 for the use to be ‘begun’.
Equally of note is the Government’s indication that the permitted development right will cover the demolition of office buildings and the construction of replacement residential buildings. To date, the permitted development right has only authorised the internal works which are necessary to facilitate the change of use from residential to office use; not any exterior change, which still requires planning permission (and, if applicable, listed building consent). As such, the Government’s intention to incorporate demolition of office buildings and replacement residential buildings within the permitted development right demonstrates a further ‘relaxing of the red tape’.
Local planning authorities which are currently exempt from the permitted development right are likely to be concerned that this remains so. This is a particular concern in those areas actively seeking to protect commercial uses (such as the Central Activities Zones in London). In response, the Government has indicated that those areas already exempt shall remain so until May 2019, after which local planning authorities will be required to make an Article 4 direction (being a direction which, in exceptional circumstances, removes permitted development rights from a specified area) if they wish to continue to restrict the use of the permitted development right.
Many (in particular, those requiring development funding) are now likely to wait for the final detail of this extended permitted development right to be published prior to committing to new projects. However, it seems inevitable that – once the detail is published – developers will be looking to invest in or review vacant commercial premises, particularly those in good proximity to existing infrastructure, as a faster means of securing residential development without the need to provide affordable housing or section 106 contributions.