New PDR proposals (and how to make the most of them)

10th December 2020

‘Tis the season to be jolly, and the Government have just added another good reason for property developers to celebrate.

They have just announced that some big proposals on permitted development rights are in the pipeline

If these changes come to pass, they could have big implications for the next few years of housebuilding.

Let’s take a look at them.

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New Permitted Development Right Proposals

 

1) Any use class E building could soon be converted to C3 (resi)

Over the summer, the planning system had one of its biggest shakeups for decades, with the introduction of the new use class E.

This grouped a number of different use classes into one, making it easier than ever to switch between those uses.

There was one slight point of confusion though, with potentially big repercussions. Before use class E came in you could already convert some of the component use classes to residential. After the change to a single use class, was that still the case?

For instance, could I buy a Gym (use class D2), claim it was now an office under use class E, then convert that office to residential?

It was potentially a small loophole, but one with massive consequences.

Now? It’ll no longer be a loophole – it’s how the system will be designed to work.

That means developers will be able to convert all of the following to residential without the need for a full planning application:

  • Shops
  • Professional and financial services
  • Restaurants and cafés
  • Offices excluding A2
  • Research and development
  • Light industry
  • Clinics, health centres, crèches, day nurseries, day centres
  • Gyms and indoor recreations (that don’t involve motors or firearms)

Like I said, it’s a big change that unlocks huge opportunities for developers.

Cafe exterior

The size of the prize

A quick look on LandInsight reveals over 1.4m use class E properties in the UK. 

That’s a lot of properties that can be converted to residential without the need for a full planning application. And considering many would fit multiple homes, it offers a huge opportunity to developers who snap up the sites first.

(If you’re already a LandInsight user, you can easily search by use class E yourself to find good opportunities for when this change happens. Here’s how.)

 

2) There could be fewer size restrictions on retail- and office-to-resi conversions

As if that shift wasn’t big enough, this one promises to be even bigger. 

Until now conversions under permitted development were limited to sites where floor space of the existing building changing use under Class M did not exceed 150 square metres (you can see the legislation here for details).

Typically that meant only modest shops and offices could be converted to resi.

Now, by removing that restriction it will open up a lot of possibilities for much larger sites being converted, creating huge opportunities for ambitious developers.

Shopfront

The size of the prize

Another quick look on LandInsight shows nearly 60,000 offices over 150m².

Of these more than 1,200 are showing as ‘vacant’ – and this number is likely to grow in the coming months as businesses risk closure and as remote working changes the need for large offices.

In short – now is the time to start securing the best sites.

 

Why these changes?

At a time when the Government are so incredibly busy, any change can be seen as surprising, but especially changes of this scale.

So why are the Government announcing it?

Of course, I can only speculate. But my guess is there are three key factors at play:

 

1. The Government appreciate a narrative around a perceived lack of action on housebuilding would be toxic 

Pandemic or no, there’s still a housing crisis. 

We need more homes each year to keep up with demand. And the pandemic hasn’t helped with delivering them.

Anything that helps build more houses, and hit the housing targets should be well received (with the industry and the voters).

 

2. It's a solution to the 'death of the high street' (another toxic narrative)

Even before 2020, the high street was already in decline. Add the lockdown, the subsequent recession, the sweeping shop closures and changing habits of workers and shoppers, and the situation hasn’t exactly improved. 

The Government don’t want to be seen to sit around while the high streets crumble. 

These latest proposed changes broaden the range of possibilities as to what those empty buildings can be used for. After all, a collection of shiny new homes is definitely more appealing than a bunch of boarded-up shopfronts from days gone by…

Oxford Street

3. It conveys the image of cutting red tape to boost the economy

All political parties want to be seen as cutting unnecessary bureaucracy, but perhaps none more so than the Conservative party.

There’s a lot of political capital to be gained by being seen as the people removing red tape and helping businesses and entrepreneurs to flourish.

And considering the trying times that have been 2020, I'm sure anything they can to help businesses and stimulate the economy is front of mind.

 

Getting ready – whatever the future holds

These changes will still need to make it through Parliament (although given the motions to annul the PDR changes earlier this year were defeated by 122 and 128 votes that seems likely). 

But either way, what it does show is that the Government seems serious about overhauling planning.

Of course, a lot can change in a short time in politics. 

This time last year Boris Johnson had just been elected with a sweeping majority. Morale was high. Ambitions untethered. But I can’t imagine this is how he saw the first year of his premiership going…

The key to succeeding – whatever happens – is being ready.

Make sure you’re up to date on all the current permitted development rights with our free guide.

And if you want an easy way to start finding suitable sites so you’re ready to hit the ground running if these changes happen, why not request a demo of LandInsight?

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Tom is the Senior Product Manager here at LandTech. He’s a serious sports fanatic, and like many LandTech-ers, dreams of one day building his own house. He’s also an avid traveller, and his favourite trip involved rafting the Grand Canyon (even though he was hospitalised. Twice.)