Making it easier to change the use of a building, particularly from office to residential, has been an effective method of increasing the UK’s housing supply whilst preserving green spaces inside urban areas, and the green belt beyond them. From the initial liberalisations in 2010, ‘Permitted Development’ as it is termed was successively expanded to allow greater use of office space in May 2013, retail buildings in 2014, agricultural and warehouse buildings in April 2015, and then light industrial buildings in October 2017.
By 2017, 17 per cent of new housing supply in England was from changing the use of buildings, with the vast majority of this office to residential. Ministry of Housing, Communities and Local Government housing supply statistics for England show a rise from 12,520 homes created through change of use in 2013/14 to 37,190 in 2016/7 – a near tripling of homes. Given the average density of new homes, this policy has protected 2,750 hectares of greenfield land, an area larger than Oxford, Exeter, or around the size of Bournemouth.
However, this increasingly important means of supplying homes, particularly in urban areas where housing pressures are acute, is being undermined by those who are opposed to the principle of allowing people, not bureaucracies, to determine the general use of a building, even where this means no loss of amenity or extra noise or problems for those around it.
Permitted development did not mean a free-for-all for property developers: safeguards remain to ensure the building is suitable for human habitation; you also need ‘prior approval’ on potential highway and transport impacts, contamination and flooding risks.
The Chief Planner, Steve Quartermain, also laid out two exemptions in a letter to all English planning authorities wherein local authorities would require ‘exceptional circumstances’ where their introduction would lead to the loss of a nationally significant area of economic activity, or substantial adverse economic consequences at the local authority level that would not be offset by the proposed new rights.
The policy has proved popular with businesses and renters. However, it was not without its critics. Liberalising change of use was resisted by many local authorities and planners, particularly London. Earlier this year, the Local Government Association called for it to be suspended nationally, on the grounds that it was causing a shortage of business space, lower levels of affordable housing, and was creating unsuitable homes. These criticisms are largely unfounded.
Fears of a shortage of office space in booming areas like London have been exaggerated, reflected in the somewhat sluggish market for office space in the capital.
Arguments about missed contributions by landowners and Section 106 contributions (used by local authorities for building affordable housing amongst other things), are overblown since most are at the lower end of the price scale, and the cost of conversion leaves little or no surplus to pay for PD. MHCLG research has revealed that less than one in three of the 8.5 per cent of new properties coming from a change of use that requires planning permission (e.g. due to fundamental changes over and above use) make any kind of contribution, showing that the capacity to make such payments is limited.
Concerns about the quality of the homes are also misplaced. Inspection regimes remain in place to ensure they are fit for human habitation, and though there are complaints about their typically smaller size, this is largely a reflection of the general housing crisis: new builds are similarly criticised. Arguing that we should restrict the supply of new homes because not all are large enough would just push up the price and make the shortage of housing space even worse – particularly in places like London.
In spite of this, the ongoing success of permitted development is by no means assured: threats exist at the local, metropolitan and national level. The most immediate is an increase in ‘Article 4’ Directions. This allows a council to withdraw permitted development rights in a given area, with permanent effect. Despite MCHCLG’s suggestion that there should be a ‘particularly strong’ case for such a direction, its use appears to be rising in London, hindering the provision of homes just where housing need is greatest.
The new Draft London Plan (Policy E1) published by the London Mayor’s office states that ‘existing floorspace capacity in outer and inner London … should be retained, supported by borough Article 4 Directions’. This announcement followed Kensington and Chelsea’s proposed borough-wide Article 4 Direction in September, as well as Westminster and the City of London’s proposed borough-wide Article 4 Directives that were announced in January and February respectively. These threats to Permitted Development by local and metropolitan authorities have failed to provoke a response from MHCLG. Councils, particularly in London, are introducing general exceptions which overrule this policy - which will mean fewer underused offices and shops becoming homes. This attempt to reverse the supply of new homes is backed by the Mayor of London. While in theory MHCLG could stop this by revoking these, so far no action has been taken.
This inaction represents the greatest threat to Permitted Development. The passivity of Central Government has empowered some local authorities to undertake a land-grab to reclaim planning control that PD had denied to them, and ongoing inaction may encourage councils to more to follow suit. The Mayor of London should reverse his changes in the draft London Plan to avoid reducing the number of homes being created in London from change of use.
If the London Plan is not amended, the Government should issue a written ministerial statement or guidance and make clear that they will enforce Article 4 directions very carefully, throwing out those which are not clearly necessary, given how far change of use contributes to new housing supply.
If no action is taken either by the Mayor or Government, this could lead to other councils up and down the country also moving against change of use and restricting the policy in their area. At a time when we need new housing supply more than ever, this would be a change for the worse.
Our full report can be found here.