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Offices to Residential Conversion – A Free Ride for Developers?

31 January 2013
The Government announced its latest initiative to ease the housing crisis and stimulate growth on 24 January (click here to view the ministerial statement).  From Spring 2013, for a trial period of three years, new rights will permit changes of use from commercial to residential without the need for planning permission.

At first glance these rights might seem like a welcome breath of fresh air, but the implications of these changes and how they are likely to work in practice remains to be seen.  The Government consulted on this very issue last year, receiving a mixed bag of responses.  Whilst many welcomed changes facilitating re-use of vacant commercial buildings, others had concerns as to whether office buildings are always in the right location and whether facilities exist to support residential use.  The Government has clearly now decided that the need to ease the national housing shortage takes precedence.

However, the ability to change use won't be automatic.  There will be a "tightly drawn prior approval process" covering significant transport and highway impacts, areas of high flood risk, land contamination and safety hazard zones.  Any change of use which cannot satisfy the prior approval requirements will still need planning permission. 

Local authorities may seek an exemption to the new rights in respect of specific areas in their locality.  Exemptions will only be permitted where local authorities clearly demonstrate that the introduction of the new rights will lead to (a) the loss of a nationally significant area of economic activity or (b) substantial adverse economic consequences at the local authority level which aren't offset by the positive benefits the new rights would bring. 

The Government has said exemptions will only be granted in exceptional circumstances. It is clear from the tone of CLG's letter to local planning authorities (click here to view CLG's letter) that exemptions are expected to be few and far between.  This is backed up by the very short time scale (full applications to be submitted by 22 February) and CLG's statement that this is likely to be local authorities' only chance to gain exemption in the next three years.  Many planning authorities, including the City of London, are likely to be urgently looking at making such an application.

In light of this, it's a safe bet that local planning authorities will resort to scrutinising the prior approval process as a means of exerting control and to resist changes of use it doesn't like.  In addition, any associated physical development to facilitate the change of use will still require a planning application, giving leverage to local planning authorities for any scheme which can't rely on a purely internal re-fit.

One key issue absent from last week's announcement is affordable housing, which in most cases won't be provided if permitted development rights are relied upon. 

A trial period of three years is a sensible way forward.  Whilst the initiative should certainly help address the housing shortage, communities could well see a mixed picture in terms of the quality of housing schemes delivered under the automatic right to change use.

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