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WORK FROM HOME – are upcoming changes to permitted development rights likely to speed up the delivery of homes and revive the office to residential conversion market?

Originally brought in to speed up housing delivery over the years, office to residential permitted development rights (“PD rights”) have received a bad rap due to some developments being considered “substandard”.

The Government therefore sought to curb PD rights in 2021 so that any property where a permitted development application was made on or after 6 April 2021 must have:

  • been empty for three months;
  • been used within Class E for a period of 2 years prior to the date of the application; and
  • a floor area of less than 1,500 square meters

There was also an eight-week prior approval process requiring developers to apply to the local planning authority for determination on certain matters, including whether there was a requirement to provide for adequate natural light in all habitable rooms. These safeguards, together with the eight-week prior approval process, seemed to negate the benefit of the PD rights.

With new housing delivery at an all-time low the Government has decided to review the PD rights and scrap the three-month vacancy requirement along with the floor space cap. Whilst the prior approval process will remain the move is clearly aimed at boosting housing delivery.

Notwithstanding that the PD rights apply to any property within Use Class E (think shops, restaurants, gyms etc.) with office demand still subdued following the pandemic and only A+ stock letting quickly, the new PD right should prove an attractive proposition for investors/developers wondering what to do with redundant office stock in need of significant investment to meet anticipated MEES thresholds.

Other potential benefits from the new PD rights are:

  • an easier way to breathe life into high streets and improve the social mix of an area;
  • prioritising retrofitting over demolition thereby saving the embodied carbon in out-of-date office blocks; and
  • faster housing delivery.

Whilst any new housing will be welcome, we don’t expect the new PD rights will be a silver bullet to the UK’s housing woes as:

  • not every office building will be suitable for conversion; and
  • it’s unlikely that conversions will provide the stock required as most conversions will end up as leasehold flats aimed at first time buyers or the rental market.

Notwithstanding these reservations, we have already seen an increase in developers and landlords enquiring about permitted development opportunities, so there’s scope for a much needed shot in the arm for the commercial investment market.

If you are looking at a potential office to residential conversion project why not get in touch with the team @Greenwoods Legal LLP to discuss your options over coffee.

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