There have recently been some complex changes proposed to the planning rules in England, some of which are already in force. This note serves to highlight the changes and proposals which may be of interest to lenders in the real estate finance arena – particularly those who lend to house builders or developers.
As well as COVID-19 specific regulations regarding consultations and adding the ability for planning decisions to be made virtually via videoconferencing, the Government has also made changes to the planning rules themselves.
Use Classes Order and General Permitted Development Order
The Use Classes Order has been overhauled; almost completely removing Use Classes A, B and D and introducing E and F, which will have a wide-ranging effect on everything except residential uses which remain unchanged. Attached to this note is a table highlighting those changes.
Yet more additions to the General Permitted Development Order have been made, including allowing additional stories on blocks of flats and individual houses as well as the introduction of an ability to demolish and rebuild redundant office buildings and convert to residential. There are many caveats to this and the rules are increasingly moving towards subjectivity in permitted development, which was never the original intention. Changes to both Orders are currently subject to Judicial Review but assuming that is unsuccessful, then great care will need to be taken when referring to or relying upon Use Classes or Permitted Development.
The Government’s two recent consultations: Changes to the Current Planning System and Planning for the Future contain the foundations for overhauling nearly all of England’s current planning regime. Changes to the Current Planning System not only outlines suggested changes to the housing numbers methodology, but it also suggests a relaxation of the affordable housing delivery rules, places further emphasis on the “First Homes” product and suggests an extension of permission in principle to apply to major development.
The white paper on Planning for the Future proposes some radical changes to the planning landscape. It suggests wide-ranging modifications to land allocation and the local plan process, the replacement of CIL and Section 106 Agreements with a national infrastructure levy, and the moving away from a local discretionary system to a more national rules based one, whilst placing a greater emphasis on design.
In relation to the local planning process changes, it is proposed that every area is to have a local plan in place by December 2023. The Government is also set to introduce statutory time limits for local plans. There will be a 30 or 42 month time frame within which local housing plans are to be developed and agreed – a step-change up from the current 7 year average. Sanctions will be imposed where time limits are not met.
In conjunction with the new time limits, the Government seeks to simplify the allocation of land by introducing an ambitious approach of having three categories into which all land will be put; Growth Areas, Renewal Areas and Protected Areas. It is proposed that where land is identified as a Growth Area (akin to a formal allocation within the existing plan process), this will have the effect of automatically securing outline planning consent in respect of that land.
The Government has stressed the need to replace the discretionary nature of the planning application system. Clear national rules are proposed for what can and cannot be done. Local plans will set out site and area specific requirements, alongside locally produced design codes. These will sit under national development management policies. If the white paper’s suggestions are enshrined by legislation, CIL and Section 106 agreements will be abolished and replaced with a national Infrastructure Levy. The Government intends for this to be a universal, value-based, flat rate charge, set at a single or varied rate. The intention is that this single levy will meet all infrastructure needs associated with the development and, in a move away from the current planning obligations, will not be open to negotiation on viability grounds. The aim is to aid small and medium sized builders, whilst lessening delay by making the system more predictable.
However, most believe that this proposal is unnecessary and will only create far more problems than it solves. The above changes are in some cases controversial and most of the essential detail is lacking, but they do focus on an uplift in house building and will therefore create more opportunity for the industry. Developers, funders, investors and landowners alike will need to closely consider how the proposed changes, if brought in, will affect them going forward.
If you have any queries regarding the changes already made to the planning system, or how the significant changes being proposed might impact your business, then please do not hesitate to get in touch with our Banking or Planning and Environmental Teams who will be very pleased to advise you.
English Use Classes – changes from 1 September 2020
Amendments to the Town & Country Planning (Use Classes) Order 1987 by the Town & Country Planning (Use Classes) (Amendment) (England) Regulations 2020, Town & Country Planning Use Classes (Amendment) (England) (No. 2) Regulations 2020 and the Town & Country Planning Use Classes (Amendment) (England) (No. 3) Regulations 2020 which come into force on 1 September 2020.
NB: Change of use within the same class is not classed as “development” requiring consent. Use classes prior to 1 September 2020 will remain relevant for certain change of use under permitted development rights, until 31 July 2021. Changes of use outside of the same class which are permitted under the Town and Country Planning (General Permitted Development) (England) Order 2015 (as amended) are generally subject to conditions and / or prior approval. Other changes would require planning permission. Existing conditions restricting use classes specifically or descriptions restricting or stating uses will continue to apply and whether the property was in lawful use may affect the operation of the new Use Classes.