New permitted development rights on converting office space

On 24 January 2014 the Government announced a package of measures that include the much talked about changes to the permitted development regime to allow the conversion of offices to residential. The changes are due to come into force in Spring 2013.This article setsout details of the changes, the possible exemptions, and the actions that may need to be taken by local authorities and landowners/funders who may benefit from these changes.

25/01/2013


On 24 January 2013 the Government announced a package of measures that include the much talked about changes to the permitted development regime to allow the conversion of offices to residential.  The changes are due to come into force in Spring 2013.

The Bevan Brittan housing team have been listening with interest to the pre-announcement fanfare on these changes. Of course, the coalition government is keen to keep Britain building, people in jobs on kick-started developments and the economy moving; so this further intervention in the planning regime is not a huge surprise.

In this alert we set out details of the changes, the possible exemptions, and the actions that may need to be taken by local authorities and landowners/funders who may benefit from these changes.

New permitted development rights will be introduced to allow a change of use from B1(a) office to C3 residential purposes.  Any landowner wishing to take advantage of the change of use provisions will have to follow a prior approval process before making the change and this will include consideration of:

  • significant transport and highway impacts; and
  • development in safety hazard zones, areas of high flood risk and land contamination.

The new permitted development rights will only cover a change of use and any associated physical development which currently requires planning permission will still require permission.  A proposed change from commercial to residential use that does not benefit from the new permitted development rights e.g. where it cannot satisfy the prior approval requirements; will continue to require a planning application. Any such application will be determined in the light of paragraph 51 of the National Planning Policy Framework which encourages local authorities to bring back into residential use empty housing and buildings.

The new permitted development rights will come into force in Spring 2013 and will run for a period of three years from the date of them coming into force. The Government has said that it will consider the effectiveness of the changes towards the end of the three year period and it is possible that the rights may potentially be extended for a further period or indefinitely.

Alongside the new permitted development rights the Government has announced that local authorities will be given an opportunity to seek an exemption for specific parts of their locality.  Exemptions will only be granted in exceptional circumstances, where local authorities clearly demonstrate that the introduction of these new permitted development rights in a particular area will lead to:

  1. The loss of a nationally significant area of economic activity; or
  2. Substantial reversed economic consequences at the local authority level which are not offset by the positive benefits the new rights will bring.

The Government has stressed that these measures will make an important contribution to assisting the economic wellbeing of the country and recognise that any loss of commercial premises will be accompanied by benefits in terms of new housing units, additional construction output and jobs.  It is clear, therefore, that the government is unlikely to grant an exemption without good reason.

The appraisals have received a mixed reception and local authorities in particular are concerned about the measures. The City of London has already argued that freedom to convert offices to residential could undermine its unique commercial offering.  The planning authority has confirmed that the City will seek an exemption as there a concern that central London office stock is under grave threat from the wave of inward residential investment.

The property industry has largely welcomed the changes and the British Property Federation has commented that although office to residential conversions won’t work for all buildings this tool could be very useful in the suburbs where redundant office space is common and could be put to better use as residential property.

Whilst clarification is yet to be given on when the new rules come into effect, it could be good news for those areas where it is economically viable to convert empty offices to residential use, and these measures could provide an opportunity for the provision of much needed housing.  There is no mention of affordable housing or Section 106 obligations, however, and local authorities are sure to want clarity on this issue with many potentially standing to lose out from the loss of otherwise expected "planning gain".  In addition, there is a question mark over how many offices will actually be able to be changed to residential use without the need for further planning permission, as many offices will require significant alteration.

We will provide a further update once it is clear when the changes will come into force and the detail of the changes.  In the meantime local authorities should consider whether they would like to apply for an exemption as the deadline for receipt of submissions is Friday 22 February 2013 and landowners/funders should be reviewing their property portfolios to see if they hold any properties that could benefit from these changes.

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