The government is positive about permitted development

The government is positive about permitted development

Noel Meredith, Executive Director, United Trust Bank.

Changes to the planning requirements for office to residential conversions have allowed many outdated or disused office buildings to be transformed into attractive new homes. The revision of ‘Permitted Development’ legislation in May 2013 has allowed developers to bypass much of the pain usually associated with the planning process and enabled them to get to work quickly, turning urban eye-sores into well located and sought after apartments. However, a lack of clarity over what might happen when the order expired next year has prevented a number of suitable schemes from going ahead, frustrating developers and lenders.

It’s pleasing therefore that the recently published Housing and Planning Bill brought positive news and gives developers and lenders some assurance that the government intends to stand behind this initiative. The proposal is to make the temporary changes permanent and to extend the range of buildings which fall within the order. Whilst this has prompted some political debate, and the Bill has yet to pass into legislation, many developers will now start to progress schemes which they had put on the back burner until the government showed its hand.

The relaxation of planning requirements under the order has, so far, been popular with developers for several reasons. It removed the need for a developer to obtain express planning permission for the change of use of qualifying office buildings to residential use as long as the exterior of the building remains unaltered. Replacing windows with alternatives which are cosmetically similar is usually fine. Adding windows or balconies etc. needs additional permissions. Qualifying buildings must have been used as offices immediately before 30 May 2013 or, if vacant, their last use must have been as office space.

Although the Local Planning Authority still needs to give its permission in relation to flooding risk, highways and contamination matters, it has 56 days from receipt of the planning application to confirm whether it requires further details. If not, development may proceed.

The temporary legislation has been a popular and beneficial government initiative and United Trust Bank has been delighted to fund several substantial permitted development projects. A key advantage of these conversion schemes is the speed at which they can progress. In one scheme funded by United Trust Bank, our customer had negotiated to purchase the leasehold of seven floors of an eight story building, comprising over 20,000 square feet of open plan office space. They exchanged contracts in October 2013 and carried out some clearing and survey work before securing permitted development permission and completing the purchase very soon afterwards. Works continued at a great pace and by the 15th of January 2014 the ‘show apartment’ was completed and the group were well on the way to commencing their marketing and securing sales, months before they would usually be able to on a new build development.

Another advantage to developers is that these schemes are free from the Community Infrastructure Levy (CIL) and the imposition of affordable housing quotas, making them intrinsically more profitable.

One of the government’s biggest challenges is tackling the shortage of housing. This move, and the other proposals to deliver 200,000 discounted starter homes should send a clear message to developers that the government intends to support the industry in achieving the targeted 1 million new homes by 2020.