Market Insight

For the right sites, new office-to-residential planning rules offer a window of opportunity

May 30, 2013

May 30, 2013

The Government’s attempt to kick-start the stalled British economy by slashing red tape around the conversion of offices into residential has opened up a window of opportunity for fresh development.

For suitable projects the new legislation is immediate and provides encouragement for developers to make profitable use of reduced costs and timescales to bring previously unattainable value to offices.

The change will come into force on May 30 2013 and last three years. Essentially it will expand permitted development rights for offices to convert to residential and will provide a way of unlocking new renovation projects; giving genuine options to make investments pay off.

It would be a mistake to view the changes as a planning free-for-all and to seize this opportunity it is important to recognise the obstacles that still exist, the smartest sites to target, and the mistakes to avoid – such as rushing ahead where homes will be difficult to market.

Vital too is to understand clearly, such as through advice provided by a development and building consultancy, the financial viability of the project and practical building work required.

Factors to consider include:

  • The continued requirement for building regulations
  • The inability to make any external changes to the building without planning permission
  • Any conditions attached to the original planning permission for the existing building which restricts development
  • Community Infrastructure Levy contributions
  • A key benefit, however, is that as the development would be permitted development there would be no requirement for a Section 106 Obligation, so no affordable housing contribution would be required.

    To illustrate the savings from not providing a Section 106 payment, we have taken the scenario of a 600-square metre office and applied a Surrey Local Planning Authority Section 106 requirement based on a conversion into six two-bed flats. Under the normal planning permission route a S106 payment of circa £40,000 would have been required, demonstrating that big savings can be achieved.

    There are, however, six fundamental constraints that could restrict achieving a change of use through permitted development and trigger the requirement for planning permission.  Making use of the expert advice, experience and local knowledge such as that offered by Vail Williams will be crucial when assessing development potential.

    In addition, 17 local planning authority areas have exemptions, including several within London boroughs. Other restrictions include certain types of locations unsuitable for conversion, listed buildings and scheduled monuments.

    There are time restrictions too, such as for buildings to have been occupied as offices (B1(a) use class) prior to the legislation. This is to avoid sites being speculatively converted to offices with the sole intention of then to switch to residential use.

    For any sites identified as meeting the criteria for a change of use through permitted development, an application of prior notification is required to be submitted to the Local Planning Authority, similar to a normal planning application, containing a publicly available written description of the proposal, a plan and fee.

    The local planning authority will assess the proposal’s potential impact on traffic, flooding and contamination, plus any representations by the general public, other consultees and national legislation.

    The applicant should then be notified whether prior approval is required or given approval under permitted development rights. If this is not received within 56 days, then development may begin.

    There is a grey area created by the new legislation instructing local planning authorities to “have regard to the National Planning Policy Framework issued by the Department for Communities and Local Government in March 2012 as if the application were a planning application”.  It will be important to monitor how Local Planning Authorities interpret and respond to this.

    Overall, there has been some speculation that the difficulties of conversion, the visual appeal of many office buildings and the still applicable building regulations may be show-stoppers for the conversion of many offices to residential.

    Where this is the case these new permitted development rights could still provide developers with a starting point to enable negotiations with the Local Planning Authority on further more appropriate redevelopment.

    Although it remains to be seen how the legislation will be interpreted, for sites that are both viable and within the new rules, these changes could bring welcome new value.

    Vail Williams can provide advice on all of the areas mentioned above including policy, viability and site development potential via our in-house Planning Team, Development Team and Building Consultancy Team.

    A detailed brief note on Permitted Development Rights can be downloaded here.

    Rosie Sterry

    Planner – Vail Williams LLP

    Tel: 07887 627931