New Permitted Development Rights
Michael Bristow is the CEO and Co-founder of CrowdProperty. Here, he talks about new permitted development rights and the challenges and opportunities that come with them.
In this article, Mike Bristow, CEO of CrowdProperty, steps back from the barrage of permitted development rights (PDR) changes to pull together a top-level post-COVID-19 view of implications and opportunities for property developers.
The increase in online shopping over the years has thrown the future of the high street into question. With the forced closure of shops due to the coronavirus pandemic, this has further taken its toll on the state of the UK high street.
In an attempt to capitalise on the growing number of vacant commercial buildings, the Ministry of Housing, Communities & Local Government announced a consultation outlining proposals for the introduction of new permitted development rights (Class MA) for premises falling within Use Class E.
It was announced on 31st March that sites falling into this category will be alleviated from planning permission to convert to residential use. This follows several other changes introduced by the government this year in order to reshape the planning system, bring certainty to the planning process and support the "build, build, build" initiative. The impact of the pandemic has seen businesses move online, leaving an oversupply of vacant commercial properties. The proposed rights would enable SME developers to repurpose these buildings, thereby supplying more homes and contributing to economic recovery.
In order to prevent a development free for all, the sites must be under 1500m2, must have been commercial for two years prior and must be vacant for at least three months. They also cannot be used as an HMO (House of Multiple Occupation) and must be for residential use only. Furthermore, local authorities can designate areas where PDR is restricted under Article 4 of the new legislation – typically used to protect an area due to historical importance. Other exclusions include whether the site falls within Article 2(3) land (i.e. AONB, the Broads or National Parks), a SSSI or listed building.
The changes will not come into effect until 1st August 2021; however, data from LandTech has highlighted that throughout the month of April, immediately following PDR announcement, searches on their databases for eatery sites to be converted to residential use rose by 575%. Searches for financial and professional services units for residential conversions rose to 696.6% demonstrating that developers are keen to take advantage of this opportunity.
Some argue that the high streets are ideal for residential development compared to offices, as being located in towns and cities is a highly desirable location, being close to shops and restaurants. Consequently, this could create a new lease of life for the high street as more people living locally will cause an influx of potential customers. The increase in demand will mean the high street is no longer a 9am-5pm economy as the footfall will continue into the evening as bars and restaurants remain open.
The ever-growing concern is the country’s need for more housing as estimates now suggest that the UK needs to build 345,000 new homes every year. Considering this, LandTech calculates that presently there are c.800,000 high street units that fall into the appropriate size for conversion in the UK which will facilitate greatly the government’s “build, build, build” initiative.
Naturally with any legislation that proposes drastic changes, there will always be an element of controversy. Councils are arguing that more should be done to preserve the high street as it’s necessary for towns to have an economic centre. By removing the planning permission originally required to convert these buildings, there is apprehension among organisations such as Royal Town Planning Institute (RTPI), the Royal Institute of British Architects (RIBA), the Chartered Institute of Builders (CIOB) and the Royal Institute of Chartered Surveyors (RICS) that without official oversight runs the risk of creating poor quality housing.
Whilst these permitted changes remove the hassle of applying for planning permission for conversion, they will be required to go through the Prior Approval process, a shorter planning process (just 56 days typically) meaning that if they are granted, they are capable of meeting the requirements of the permitted development legislation and work can commence, typically within three years from the Prior Approval being granted.
Considering all the controversy, the country needs more housing and these proposed changes could go some way in helping solve this issue. At CrowdProperty, we have funded many commercial to residential builds across the UK including offices to residential, care homes to residential and even former chapels to residential. Our deep, hands-on asset class expertise, offering property finance by property people, ensures that we are best placed to assist in all enquiries of this nature, and our team has recently been bolstered by the appointment of a qualified Town Planner to add further deep expertise to our proposition.
To find out how we can help with your property project, apply in just 5 minutes at www.crowdproperty.com/apply.
