One Year On: Are the changes in ‘Permitted Development Rights’ working?

Almost one year has passed since planning rules were amended to make it easier to change the use of a building from office to residential. Rosling King Partner Peter Lewis explains how there are already doubts over whether these changes will succeed in the long term.

In an attempt to support economic growth, the Department for Communities and Local Government announced that a change would be made to the permitted development rights. The change, which came into effect on 30th May 2013, has relaxed the rules relating to changing the use of a building from office to residential. Prior to this announcement, such a change in use would require an application to the local authority.

This announcement has been a subject of discussion since a consultation in 2011. It was brought into effect with reference to the National Planning Policy Framework which states that local planning authorities should normally approve planning applications for change to residential use and any associated development from commercial buildings where there is a need for additional housing and there are not strong economic reasons which would make the development inappropriate.

Aims of the Change
This change in the permitted development rights would hope to increase housing supply and encourage economic growth by getting developers to bring underused offices back into effective use as houses for local residents.

Prior to the change
Prior to the amendment any material change in the use of a building would constitute a development, and any development would require planning permission. Not all changes in use required planning permission as The General Permitted Development Order (“GPDO”) allows certain permitted developments to take place without an express application for planning permission.

How the change has been implemented
The amendment allows for the change in the use of a building so that, for a limited period of 3 years, a building which is authorised for use as a B1(a) office can now be used for C3 residential purposes without expressly obtaining planning permission.

Whilst it is true that no express planning permission is required, a developer hoping to change the use of a building from office to residential will still be required to apply to the local planning authority before commencing the development. This application is not the same as the previously required planning application as it only requires the developer to apply to the local planning authority for a determination as to whether the prior approval of the local planning authority will be required as to:

  • transport and highway impacts of the development;
  • contamination risks on the site; or
  • flood risks on the site.

Providing that no issues arise from this application, formal planning permission will not be necessary.

Problems with the change
The change in the permitted development rights responds to the topical issue of housing shortages. However, despite the relaxation in the rules affecting the use of a building, a developer may still require further planning permission. For example, most offices will have the external appearance of offices which would not usually be fit for residential purposes. A developer purchasing an office block with the intention of developing it as a residential building would therefore still require local planning permission to develop the building for its desired purpose. Whilst this may slow down the development process, arguably it will still be quicker than building a property from scratch. This is likely to appeal to developers as it provides them with greater flexibility as to the buildings that they can purchase and how they can be developed.

Following the announcement of this change, local authorities were given the opportunity to be granted an exemption to these rules, but only in exceptional circumstances. The criteria considered relates to whether these new permitted development rights would lead to:

  • The loss of a nationally significant area of economic activity; or
  • Substantial adverse economic consequences at the local authority level which are not offset by the positive benefits that the new rights would bring.

Although the Department for Communities and Local Government said an exemption would only be given in exceptional circumstances, it is somewhat surprising that 17 local authorities have been granted exemption to these rules.

One of these authorities is the City of London Corporation (“COLC”) who were one of the first to enter an application for local exemption. In their application, COLC argued that London is the heart of the United Kingdom’s international, financial, and business services sector and allowing offices to be converted to residential properties would lead to the significant loss of existing office floor space and economic activity. They also argued that this change would allow the introduction of housing to parts of the City where it would be liable to undermine the strength of the commercial environment. The government has responded by stating that any loss of office space would be accompanied by benefits in terms of new housing and additional construction output and jobs, which will be felt at the local authority level and wider. In spite of these positive benefits, COLC have been exempted from the new permitted development rules.

A practical example
The relaxation of the permitted development rules is said to be a step towards meeting the economic needs of society. However, the change has received significant opposition and the benefit of the relaxation will be lessened by 17 local authorities gaining exemption.

Whilst many local authorities have an exemption, some applicants, including the London Borough of Richmond, were unsuccessful. Further opposition to the changes was shown in a joint high court legal challenge for judicial review which involved the London Borough of Richmond. The action was introduced in May 2013 and refused in December 2013.

Despite their opposition to this change, a local government article dated 2 January 2014 claims that Richmond had so far received 130 applications for prior approval. A publication stated on 15 January 2014 that the council claimed to have received 140 applications for prior approvals. This is an example of the rapid rate in which the applications are coming through in Richmond alone and which will apparently produce a loss of almost 50 businesses and 20,000sqm of office space.

As we can see from the Richmond example, whilst the changes will undoubtedly result in increased residential property, businesses within these local authorities will suffer the consequences.

The change in the permitted development rules has been brought in for a limited period of 3 years. The success of the change will be considered after the expiry of this term and a decision will be made as to whether this change should be permanently effected.

At the current stage, we have seen significant opposition to the changes as 17 Local Authorities have been exempted. This will reduce the extent to which the amendment will achieve economic growth and will lessen the impact the change will have towards the housing shortage. We therefore look forward to receiving statistics, when they are available, which will show whether this change in permitted development rights has met its overall aims.