"Councils can still make it difficult for prior approval to be granted, despite the government’s intention of making PDRs a streamlined and unbureaucratic process"
- Ritchie Clapson - propertyCEO
The government is thinking of making several changes to permitted development rights (PDRs) to boost house building in the country. Essentially, there are two primary PDR categories. Firstly, there's PDR for extending one's own residence, which allows homeowners to add extensions without seeking council permission.
Secondly, there's PDR related to changing the use of commercial buildings, particularly converting them into residential units. The government hopes tweaking these will result in more homes being built.
According to countryside charity CPRE, some 1.2 million new homes could be built using the country’s current stock of unused commercial buildings. The government has stated that we need to build 300,000 new homes every year, but in recent years, that target hasn’t come close to being met.
Wholesale planning changes that would have many voters worrying about a new affordable housing estate being built at the bottom of their gardens is a risky strategy with an election just months away.
However, using permitted development rights to recycle existing commercial buildings is far more palatable to the electorate and allows the government to be seen to be addressing the housing crisis.
PDRs are not new
PDRs have been around for decades, but they came into their own in 2015 when the government allowed developers to convert office buildings into residential use. Since then, the number of permitted development rights has increased significantly. You can now also convert gyms, doctor’s surgeries, light industrial units, banks, cafes, and restaurants into residential, as well as add new storeys to existing blocks of flats.
All buildings have what’s known as a use class, and you would normally need to apply for planning permission to change a building’s use class (e.g. to turn an office building into a block of flats). Because applying for planning permission can be slow and tortuous, the government decided to create a streamlined process whereby the change of use was automatically approved, subject to some basic checks.
Called ‘prior approval’, developers can make a PDR application for a change of use, and the council would have up to eight weeks to assess it against a short list of fundamental criteria. If they didn’t respond in that time, permission was automatically granted, making things a lot quicker and far less risky for developers.
What exactly is being proposed?
Proposals are aimed at streamlining the development process, encouraging the conversion of underutilised spaces into residential properties, and facilitating the construction of new homes. Here are some of the key changes being considered:
Wider and Taller Extensions: The government intends to allow homeowners to build wider and taller extensions without the need for planning permission. This would provide homeowners with more flexibility to expand their properties, potentially increasing living space without the bureaucratic hurdles of planning permission.
Relaxation of Land Occupation Rules: The government plans to scrap rules limiting the proportion of land a home and its extensions can occupy. This change would allow homeowners to utilise more of their land for residential purposes, potentially enabling the construction of larger extensions or additional structures.
Unlimited Loft Conversions: Another proposed change involves allowing homeowners to convert loft spaces without the need for planning permission. Removing restrictions on the amount of loft space that can be converted would provide homeowners with additional living space options and could contribute to increased housing stock.
Removal of Vacancy Requirement for Commercial Conversions: Currently, many commercial properties need to be vacant for a specified period before permitted development rights can apply.
The government is considering removing this requirement to expedite the conversion of commercial properties into residential units. This change would allow developers to start development more quickly and with greater certainty.
Lifting Size Restrictions for Commercial Conversions: Additionally, the government is proposing to remove the maximum size restriction for commercial properties that can be converted under permitted development rights. This change would enable larger conversion projects and could lead to the development of more residential units from existing commercial spaces.
Mission far from accomplished
Positive sounding as they are, these proposed changes won’t fix the housing crisis on their own. Building 1.2 million new homes from unused brownfield land would give us the equivalent of four years’ of new housing, and we wouldn’t need to touch the green belt to do it. But brownfield projects are not a good fit for the major housebuilders, so who will be doing all this development work?
If we look at the Taylor Wimpeys, Persimmons and Barratts of the world, they have a simple, cookie-cutter model: roll out standard house designs on empty building plots. Given a plot of land anywhere in the country, they can make a tidy multi-million-pound profit-building houses from their existing range of designs. But that model doesn’t work with an unused commercial building.
They could demolish it and start again, but that’s considerably more expensive than building on virgin land. If they were to convert what’s already there, they’d have to employ architects to create a one-off design for each building.
They’d also have to retrain their workforce since converting an existing building requires a different skill set than building a standard design on a vacant plot. Critically, most of these sites wouldn’t make enough profit – they’re simply not big enough.
Who will transform unused commercial property?
If the scale housebuilders are not going to be interested, what about smaller operators, known as small-scale developers?
These range from individuals like you or me to relatively small SME enterprises. Putting some flats above an unused shop can net you a six-figure profit in relatively short timescales. It’s not very exciting to the likes of Barratts, but it’s highly attractive to an individual landlord, investor, or entrepreneur – experienced or otherwise.
The government has made life increasingly difficult for property investors (particularly regarding buy-to-let) over the last decade, but it now needs to encourage new small-scale developers to enter the market. SME developers used to account for 30% of new housebuilding, but today that figure has dropped to just 12%.
Another major challenge
The local planning authorities who must give prior approval to PDR applications before works can begin are massively under-resourced, often lacking in experience (due to many senior planners departing) and are not predisposed to like PDRs, which they often see as undermining their authority.
As a result, councils can still make it difficult for prior approval to be granted, despite the government’s intention of making PDRs a streamlined and unbureaucratic process. It’s imperative that the government gets planning authorities on side and starts reinvesting in this vital area.
Summary
Proposed PDR changes offer significant opportunities to unlock housing potential by repurposing existing buildings. Yet, their success hinges on fostering small-scale developer involvement and ensuring collaboration with local planning authorities.
