The Government is keen to encourage re-using offices for residential purposes. Is this an opportunity for landlords? Roy Speer and Michael Dade advise…
In many places, market dynamics make changing the use of buildings from offices to residential a financially attractive proposition. From a practical point of view, they can work well too. The amount of alteration and adaption can be relatively small as many buildings in office use were originally houses.
The Government is keen to encourage this as part of its drive to increase the amount of housing, get the economy growing and see better use made of existing resources.
The Government’s new statement of planning policy, the National Planning
Policy Framework (NPPF), was published in March last year. This included an instruction to councils that they should normally approve planning applications for change of use of commercial buildings to residential, together with any associated development, where there is an identified need for additional housing.
‘Commercial’ for this purpose is defined as use class B purposes (offices, light industrial, general industrial and storage).
It is subject to the proviso that there are not strong economic reasons why such changes would be inappropriate.
This is a clear steer to councils to permit residential conversions, but it does give them a get-out clause using the economic justification.
Some councils have policies in their plans aimed at preventing the loss of business space to other uses, in order to preserve employment. Where a council does have such policy in place, it might still decide to apply that in favour of the more liberal national guidance, and rely on the original justification for its local policy.
In September last year, Eric Pickles announced a number of measures intended to help get empty buildings back into productive use, which followed a consultation carried out in 2011.
These included a proposal to introduce new permitted development rights to enable change of use from commercial to residential without having to apply to the council.
The good news for property owners was tempered by the intention to give councils an opportunity to seek an exemption where they fear adverse economic impacts.
The proposal was described as a ‘common sense measure’ which would help regeneration of towns and cities, with high streets benefiting from more residents and increasing footfall, and so generating extra business to support local shops.
The Department for Communities and Local Government signalled at the end of January that the new permitted development right will come into force in spring of this year, allowing change of use from class B1(a) (offices) to class C3 (dwelling houses).
On the face of it, this looks quite straightforward. However, nothing in planning is that simple.
Class B1(a) is defined as office use, other than offices which come in the A2 use class. Class A2 covers financial, professional and other services appropriate to a shopping area and principally serving visiting members of the public.
So, premises such as building societies, estate agents and betting offices are excluded.
Restricting the permitted change to B1(a) use means the right would not be available for properties used for research and development or for light industrial purposes.
However, since these latter uses fall within the same B1 use class as offices, it should be possible to change from one of those uses to office use and then to residential, unless the yet unseen detail of the regulations prevents this in some way.
Similarly, there is a permitted development right to change from B2 general industrial or B8 storage to B1(a) use, where the floor area of the unit is less than 235 sq m.
In the absence of any prohibition, this could allow the same two-step process to residential use. The C3 use class comprises not only a house or flat occupied by an individual or family, but also dwellings with up to six residents living as one household, including where care is provided. There is an existing right to change from a C3 dwelling to a C4 small HMO, in the absence of an Article 4 direction or planning condition to the contrary.
So it should be possible to switch from office to dwelling to small HMO – again, unless the regulations, when published, prohibit this.
The new permitted right will relate only to the change in the use of the building. It will not cover any physical work which might need planning permission, for example new windows or doors. Consequently, a planning application would have to be made to carry out any such work.
So while councils should not question the principle of the conversion, some reluctant ones might nevertheless use external alterations as a means to try to frustrate a scheme.
Before making use of the new permitted development right, there will be a prior approval process to go through with the council. This concerns ‘significant transport and highway impacts’ and proposals in safety hazard zones, in flood risk areas and on contaminated land, and allows councils to consider whether the change of use would be satisfactory in these limited respects.
If the proposed change falls foul of prior approval requirements, a planning application would have to be submitted in the usual way. This would then be judged against the NPPF policy, in the light of local circumstances.
The Government’s intention is to introduce the new permitted development right for a period of three years. Towards the end of this time, it will review the operation of the right and decide whether to let it run for a further fixed period or on a permanent basis.
The Government is also giving councils the opportunity to request an exemption from the change of use right for parts of their administrative areas. The importance of the measure to the economic wellbeing of the country is being stressed and so exemptions will only be granted in exceptional circumstances.
Councils would have to show either that there would be loss of a nationally significant area of economic activity or there would be substantial adverse economic consequences at the local level, which would not be offset by the benefits the new rights would bring. This is said to be a one-off opportunity for councils to make their bids for exemption.
If granted, the permitted development right would not apply in the particular areas, which will be set out in the permitted development order. If a property owner then wishes to convert an office to residential in an exempted area, a planning application would have to be made. Should permission be refused, the disappointed applicant will not be able to claim compensation from the council.
Councils which are not given an exemption, or indeed any other council, will still have the power to make an Article 4 direction removing property owners’ permitted development right to make the change of use.
The difference between this and an exemption is that, if refused planning permission in an article 4 direction area, the applicant is able to claim compensation.
Adding a condition
The final way in which a council might prevent or limit permitted development is by attaching a condition to a planning permission. So, for example, in granting permission for new offices, the council might take the opportunity to add such a condition where it can be justified.
The advent of this new permitted development right should provide great scope for conversion schemes. We will need to see the detail of the regulations to ascertain exactly how it will work.
Like most other areas of planning, this could prove to be more complicated than it ought to be and, no doubt, there will be grey areas and disputed interpretations.
Accordingly, property owners should take advice on their projects before taking action or committing themselves.
Roy Speer and Michael Dade are planning consultants with particular expertise in self-build and advising landlords. They are also authors of ‘How to Get Planning Permission’. For further information, email email@example.com or visit their website: www.speerdade.co.uk.
This article originally appeared in the March/April 2013 edition of Residential Property Investor, the RLA’s very own industry magazine. Read the online version of RPI now.