Offices to Residential Permitted Development Rights Extended
Legislation enabling the conversion of unused offices into residential housing have been extended indefinitely in a long-awaited move that's been welcomed by developers.
In this post we'll briefly explore the history of the legislation, its impact and what the future holds.
A brief history
First introduced in 2013 as a way to mitigate the UK's chronic housing shortage, the offices-to-residential Permitted Development Rights (PDR) saw something of a mixed reception, with some local authorities – like our own Manchester City Council – being fearful of losing valuable office space in key areas.
However, as it turns out the potential impact was initially, greatly overestimated. In a previous blog, we assessed the impact on the Greater Manchester area, finding that only 212 homes had been delivered through this route across seven local authorities.
By contrast, Estates Gazette found in January 2014 that 399 notifications (on individual buildings) had been received across just five boroughs in the capital.
Things seemed to ramp up as the market sought to take advantage and a British Council for Offices (BCO) report from earlier this year reported that while 7,600 homes had been ushered in via offices-to-residential PDR (much more than was initially forecast) – six million square feet of office space had been sacrificed as a result.
It went on to claim that of the 163 councils that applied for exemptions from the scheme, a mere 33 areas were granted it – with London boroughs overwhelmingly represented.
BCO chief executive Richard Kauntze warned that it was important to take stock and consider the "growing challenge" Permitted Development posed to the office market.
"While the PDR can certainly contribute towards much needed housing, a cautious approach is required. When, in 2013, the government consulted on the possibility of allowing the conversion of offices to housing without the need to secure planning permission, the BCO stressed the vital need to avoid a free-for-all," he said.
Deadline and Extension
Office-to-resi PDR was initially set to expire in May 2016, with a great deal of confusion over whether schemes needed to be fully implemented and occupied by the deadline to be lawful.
As the Home Builders Federation said in its 2015 Spending Review Submission:
"One issue that is currently a concern to house builder SMEs is the permitted development right to convert redundant offices to residential use. This prior approval process was granted on a time-limited basis until May 2016. However, given that the building work must be completed, rather than merely started, before that deadline the scheme has, effectively, already ended since developers are worried that they will not be able to implement the new use prior to the cut-off date, meaning they would not be able to complete the project."
This fear was rendered void with the scheme's extension being unveiled within the Housing and Planning Bill, published earlier this week.
Commenting on the continuing scheme, Housing and Planning Minister Brandon Lewis claimed the extension was part of the determination in Whitehall to see the homes Britain needs to get built.
"Today’s measures will mean we can tap into the potential of underused buildings to offer new homes for first-time buyers and families long into the future, breathing new life into neighbourhoods and at the same time protecting our precious green belt," he said.
In addition to the continuation of conversions, PDR has also been extended to enable the demolition of offices to make way for residential uses (although this will be subject to limitations and prior approval from local planning authorities), as well as the use of light industrial buildings and laundrettes.
This broadening of scope marks a fundamental shift in the way the regulations work and arguably stands as a ringing endorsement of their better-than-expected performance to date.
Extensions to exemptions were also revealed, which will remain in place until May 2019, giving local authorities time to make an Article 4 direction to remove these rights and implement a requirement for proper planning procedures for any proposed change of use.
Manchester city centre is the only place north of the border to see an exemption and only time will tell if we'll see other LPAs make more areas exempt.
All-in-all its welcome news for residential developers, doing away with much of the confusion surrounding the deadline and potentially encouraging banks to start lending for these types of schemes once again.
As mentioned previously, we've not seen much in the way of office-to-resi conversion under the guidance in the north-west, with the lion's share concentrated in London. And it's a definite possibility that the extension will prompt more of these north of the border.
Do you welcome the PDR extension or are you ambivalent about its potential? Whatever your thoughts – we always love to hear from you. Simply leave us a comment below or get in touch via Twitter.