UK: The Yellow Brick Road To Ware-Housing Everywhere

Last Updated: 19 December 2017
Article by Romola Parish

The Government and the Mayor of London have been at their most creative in finding space for new housing, both within and outside London. Some of the emerging policies and strategies certainly offer effective potential for increasing housing, but are not without their problems.

PERMITTED DEVELOPMENT RIGHTSPERMITTED DEVELOPMENT RIGHTS

Office buildings

The permitted development rights allowing conversion of office buildings to residential property were made permanent in April 2016 (UK SI 2016/332) subject of prior approval of noise, transport, contamination and flood risk impacts. The changes must be completed within 3 years of the date of approval. Some local planning authorities ("LPAs") are likely to bring an Article 4 Direction into force in order to continue to restrict these conversion rights, so developers will need to apply for planning consent in order to maintain employment uses, and a balanced mix of uses in their jurisdictions, and to ensure that developments can attract CIL and affordable housing obligations, as an exercise of PDRs slips under this radar.

Light industrial buildings

The same SI introduced a temporary right to convert light industrial premises to residential dwellings. There are prior approval requirements that seek to ensure that the property is fit for residential purposes. This might be more challenging than converting offices, but for different reasons. This came into force on 1 October this year, but is subject to limits:

  • the building must not exceed 500 square metres;
  • the rights do not apply to properties in a safety hazard area or in a Site of Special Scientific Interest, or those used for storing military explosives, or to listed buildings.;
  • Similar prior approval requirement apply as for offices: transport, contamination and flood risk, but not noise; and
  • Information must be provided about the sustainability of providing industrial storage of distribution services if the change is in an area that the LPA considers important.

For warehouse or industrial units larger than 500 square metres, planning permission will be required, but if such sites have been placed on the Brownfield Register (see below) by the end of this year, they may benefit from the new 'Permission in Principle' which is similar to a local development order in creating a presumption in favour of development.

Converted?

The configuration of office and some warehouse buildings may be suitable for the growing trend for 'micro-housing' comprising units that are smaller than the minimum space standards that apply to affordable housing, or to another emerging trend for small individual units with central shared social and working space, acknowledged as the 'shared living' proposals in the new draft London Plan. The PDRs may also conflict with the intention in the draft new London Plan that there should be no net loss of industrial space and if office blocks are converted pursuant to planning consent to residential, proposals must demonstrate that there is no need to office uses or that equivalent office accommodation is provided elsewhere.

Where PDRs are used for conversions, there is no affordable housing requirement, which is potentially a problem for LPAs seeking to raise their affordable housing delivery rates. This is also likely to be the case for warehousing conversions.

Such conversions also benefit the developer by not accruing Community Infrastructure Levy or s.106 obligations, which may raise issues for LPAs in the provision of adequate social infrastructure and transport as well as accommodating new residents in schools, surgeries and such like. On an individual conversion basis, this may not be an issue, but they could be significant cumulative effects.

Permitted development rights also apply to agricultural buildings which may be converted into three residential units, and such conversions may also require significant infrastructure input.

BROWNFIELD REGISTERS AND PERMISISON IN PRINCIPLE

Two new pieces of legislation came into force on the back of the Housing and Planning Act 2016. One is the Town and Country Planning (Brownfield Land Register) Regulations 2017 (SI/2017/403) which required local planning authorities to compile and maintain a register of previously developed land which is suitable for local housing development. The register is in two parts:

  • previously developed land of at least 0.25ha or which is capable of accommodating at least five dwellings will be entered in part 1 of the register if it is suitable and available for residential development, and if development is achievable (ie it could be brought forward within 15 years).
  • Part 2 of the register will list those sites which have been allocated for housing development by the local planning authority in accordance with prescribed procedures for publication and consultation. The register will need to specify the range of dwellings that the planning authority considers that land can support and the scale and use of any non-residential elements of proposed development. There are exceptions: development involving minerals and on land protected by habitats protection legislation cannot be granted permission in principle; neither can developments that fall within Schedule 1 of the Environmental Impact Regulations, and those in Schedule 2 which have been screened as requiring an EIA. If, at technical details stage, it becomes apparent that the proposed development should be subject to EIA, then this requirement must be met before the technical consent can be granted.

Sites listed in part 2 of the register will automatically benefit from permission in principle, in accordance with the second new piece of legislation – the Town and Country Planning (Permission in Principle) Order 2017 (SI/2017/402). This operates in a similar way to development orders by simplifying planning process for specific kinds of development: in this case, residential-led development. It applies to both redevelopment of registered and conversion of existing buildings to housing-led development, but does not apply to land allocated already under existing plans. If permission in principle is granted for a site, it is only effective for five years and technical consent will be required to implement the permission in principle.

The intention is that the permission in principle will be extended to land allocated for housing development in local and neighbourhood plans, in order to reduce delays in bringing forward housing development. Objectors to such schemes will need to fight their cause during the plan-making process.

ROOFTOP EXTENSIONS

The Housing White Paper contained proposals to allow upward extensions to existing residential buildings up to the roofline of adjoining buildings. The responses to the White Paper consultation indicate general Government support and an intention to bring this forward as part of the proposed amendments to the NPPF. The Autumn Budget proposed that extensions should be allowed up to the height of the tallest building or tree in the area without planning permission, in order to increase the housing stock (or the size of existing housing stock) without increasing its lateral footprint. The new draft London Plan indicated that building up over retail buildings and over car parks would also be viable options to maximise land use on urban areas.

THE LONDON PLAN

The 500+ pages of the new draft London Plan includes a range of proposals. There is an emphasis on housing growth without green belt release, which will mean that proposals for intensification of housing, and efficient use of land and buildings will remain important, including intensification of retail areas for residential use, office, residential and industrial uses. Affordable versions of student housing, elderly accommodation as well as office space for start-ups and SMEs are set out.

The Plan includes an affordable sheltered rental class, and reclassifies extra care and supported living as C3 residential dwellings rather than C2 uses. In order to retain these units in extra care use, planning conditions must be imposed and a C3 use will potentially attract CIL and s.106 obligations.

Other housing incentives include fast track route to obtaining planning consent for residential development is proposed where at least the minimum requirement of 35% affordable housing (subject to other conditions) is proposed, which also offers the carrot of not requiring viability to be revisited after 2 years. An affordable component 35% is given as a minimum affordable requirement, but this is now measured as a % of habitable rooms rather than dwelling units to accommodate a diversity of housing types. It is proposed to apply to all developments, even those under 10 units. On public sector land, the expectation is 50%, but this is over the whole of London, so there will be greater requirements in some places.

Hotels are recognised as significant in the London economy, but not at the expense of office space. Serviced apartments for business visitors is encouraged, but this does not include apart-hotels, which can only be developed where it will not compromise housing provision.

BUILD TO RENT

BTR gets a boost under the new draft London Plan, both as a result of the introduction of affordable private rent and affordable market sales as new forms of affordable housing, which effectively opens the door to the provision of affordable housing by the private sector. This is subject to constraints, but the fast track route applies to BTR schemes that comply with a number of criteria, including that they are held as BTR by a covenant of at least 15 years and there is unified ownership and management (on-site) of the development, which must have at least 50 units. Be warned – there is a clawback mechanism to recoup affordable housing contributions if the covenant is broken.

LOOKING FORWARD

Next year is likely to see some clarification of these proposals and a raft of public consultation on schemes to deliver housing ever more creatively. It should be an opportunity for developers and investors, whether or not they are interested in mainstream housing or more niche accommodation such as for students, elderly and those in need of care, or the young professional population who are open to more novel as well as affordable living options

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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