The Government has announced that at some point in Spring 2013 it will bring into effect a new permitted development ("PD") right, to allow changes in use from Use Class B1(a) (offices) to Use Class C3 (residential), so that there will be no requirement to obtain an express planning permission for such a change in use.

The new PD right will be available for an initial 3 year trial period.

Some local planning authorities ("LPAs") are unhappy with this proposal and the Government has allowed LPAs to seek an exemption from the new PD right. Where an LPA can clearly demonstrate that the exercise of the right would lead to "the loss of a nationally significant area of economic activity" or "substantial adverse economic consequences at the local level which are not offset by the positive benefits that the new right would bring", the Government will grant an exemption. However, it expects to grant such exemptions only exceptionally. Nevertheless, 30 of the 33 London LPAs, and many of the major provincial city LPAs, have applied for the exemption.

In addition, the new PD right would be subject to "a tightly drawn prior approval process". The details of this have not yet been published but according to the Government it "will cover significant transport and highway impacts, and development in areas of high flood risk, land contamination and safety hazard zones".

A proposed change from offices to residential use that does not benefit from the new PD right (e.g. where it does not satisfy the prior approval process or is located in an exempt zone) will continue to require a planning application.

The new PD right will only cover change in use: any associated physical development which currently requires a planning application (e.g. external alterations to the office building) will still require planning permission.

The new PD right may be appealing to developers or owners of some office blocks. For example, there will be no requirement to satisfy (or even have regard to) the policies in the development plan, nor will LPAs apparently be able to require any Section 106 obligations (including any affordable housing contribution or provision within the building). However, there are a number of points which developers/owners may wish to consider further:

  1. The planning permission which authorised the existing office building should be checked to see whether it is subject to a condition which would oust the new PD right.
  2. It is not beyond the realms of possibility that LPAs may seek to impose Section 106 obligations on any related external alterations planning permission. In our view such a stance would not accord with the tests for the imposition of Section 106 obligations set out in legislation.
  3. In most circumstances a simple change in use of a building (not comprising any additional floorspace) would not impose any liability to pay the Community Infrastructure Levy ("CIL"). However, in areas where CIL has been adopted, a change in use which creates one or more dwellings (including a change pursuant to the new PD right) would be caught by the CIL regime, even if there is no additional floorspace. CIL will not be payable, though, if the building has been in continuous lawful use for 6 out of the last 12 months prior to the development being permitted. Accordingly, if an office building has been vacant for many months in an area where CIL has been adopted, CIL will be payable at the rate specified in the local CIL charging schedule upon the commencement of the change in use. Where the change in use is commenced prior to the adoption of a CIL charging schedule in the relevant area, CIL will not be payable.
  4. Building regulation approvals and requirements will still apply to the conversion. The cost of complying with these should be factored in to any development proposals.