In July, we looked at generally the issues that can arise when looking at pub conversions to residential use. Despite a brief break last month, when we digressed to consider some of the new changes to permitted development rights (none involving pubs, I hasten to add), we now move back this month to consider the subject of pub conversions, looking in particular at a recent case study.
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Homes and The Countryside
One of the much-talked about property development opportunities arising from the Government’s July 2023 White Paper has finally landed.
On the 30th April 2024, the Government made the Town and Country Planning (General Permitted Development Etc.) (England) (Amendment) Order 2024 (SI 2024 No. 579). This has introduced changes to the following permitted development rights, which will come into force from the 21st May 2024:
- Class Q: agricultural buildings to dwellings
- Class R: agricultural buildings to a flexible commercial use
Context is Everything!
Planning strategy relating to new build development proposals, including extensions to existing buildings requires a balancing act between persistence with the local authority and pragmatism concerning the degree to which you can push a scheme.
However, in all cases, a thorough understanding of the character, context and visual prominence of a site and proposals is often key to getting proposals through and optimising the potential of a site.
A recent case in which we obtained planning permission for a client for 8no new flats, close to listed buildings and in a conservation area, demonstrates the process that we went through and the importance of understanding context to unlock the development potential of the site.
Government Proposals for Short-Term Lets
The Government has been continuing its consultation on changes proposed to the short-term lets sector.
The term ‘short-term lets’ covers a wide variation of possible letting models by operators in the sector, varying generally from uses similar to hotels and apart-hotels (Use Class C1) to temporary stays of 90 days per year or less, or in other cases of more than 90 days per year (sui-generis).
Combining PD (Class MA) with ‘Air Rights’ Development
This month we are looking at a recent case study showcasing how we managed to optimise the development of a small ‘backland’ site in a constrained town centre location.
We all appreciate that it is always important for property developers and investors to have a vision for the ‘art of the possible’, as this can help to reveal opportunities that others might otherwise overlook or perceive as too improbably. However, this also needs to be balanced against robust due diligence in identifying potential limitations or constraints that will need to be overcome, either at the planning approval or implementation stage.
A good understanding of the constraints to development is an important ‘first step’ on devising a successful planning strategy.
The New National Planning Policy Framework
In December 2023, the Government published a revised new National Planning Policy Framework (NPPF). This sets out the Government’s planning policies for England and how these should be applied.
The focus of the NPPF is on housing delivery, but it does include several other provisions. The NPPF policies should be given significant weight in planning decisions and in plan-making.
Nearly 80% of local authorities have an out-of-date local plan. Where there is no local plan policy or the local plan (usually a local plan dating from pre-2004) is in conflict with the NPPF, then the current NPPF policies should take priority and carry the greater weight.
Furthermore, the Town and Country Planning (General Permitted Development) (England) Order 2015 (as amended) states in respect of prior approval decisions, such as under Class MA (commercial to residential conversions) that, to the extent prior approval engages a specific issue or policy consideration (e.g. transport, flooding, noise), “then a local planning authority must have regard to the National Planning Policy Framework, so far as relevant to the subject matter of the prior approval, as if the application were a planning application.”
Therefore, what the NPPF states matters a great deal in planning decisions.
2023
Planning Reform: Opportunity Knocks!
It has been a very busy year for proposed changes to the Planning system. With a General Election on the horizon, the enactment of the Levelling Up and Regeneration Act 2023 and a number of new changes proposed to existing permitted development rights, there is a lot to bring together and there will be opportunities – and challenges – arising for developers.
As this year draws to a close, we bring together a brief outline of the main changes and try to highlight some areas for new opportunities for the SME developer market.
Building the Case in PD Cases
When an application for prior approval or permitted development is submitted, developers face competition for officer attention on their applications with larger and more complex applications.
Officers often do not look at PD applications until at least 5-6 weeks’ in due to staffing and workloads. Therefore, it is important to prepare the case for prior approval thoroughly. Particular care should be taken in clarifying whether the site is subject to an Article 4 Direction, as sometimes there can be a lack of clarity at the local level about this.
In a recent case for a client, we were asked to withdraw the application by an officer who initially thought that the site was covered by an Article 4 Direction. This proved not to be the case and we managed to obtain prior approval within 8 weeks.
How to Get PD on Buildings ‘Outside Use Class E’
Class MA prior approval (PA) rights have become a popular route to adding value, once a building (or part of one) has been clearly established to fall within Use Class E (commercial and business use). It is much quicker or more straightforward than full planning permission, although still has its limits and complexities.
However, many opportunities for development may seem to be out of the reach of this strategy at first glance, as some sites might not appear to be in Use Class E, such as some pubs, workshops or warehouses with large office components.
These sites provide great opportunities for adding value through Class MA rights as they will often put off those that want to deal only with buildings that are more clearly within Use Class E, as long as it can be proven they fall within Use Class E. This could lead to a greater willingness on the vendor’s part to do a deal, or to negotiate on the price or other terms of the deal, such as the timescales for exchange or completion.
This article draws on our recent experience under Class MA and its predecessor, Class O (B1(a) offices to C3 residential use) and considers the essentials for this advanced niche strategy.
New Opportunities For Permitted Development
On the 24th July 2023, Michael Gove MP announced a series of proposed reforms and initiatives aimed at delivering more housing, boosting the economy and reforming the planning system.
These initiatives include new allocations from the £1.5 billion Brownfield, Infrastructure and Land Fund toward further funding in the West Midlands, Greater Manchester and more funding toward Homes England. Cambridge is also targeted as the Government seeks to enable more housing, infrastructure and high-end tech employment in this city to raise its status as ‘Europe’s science capital’.
However, at the heart of the proposed reforms in the current White Paper are the proposed changes to permitted development and prior approval, to introduce greater flexibility and relaxation in the planning system, and speed up the delivery of additional homes in towns, cities and rural areas.
Public Houses and Planning Opportunity
Public houses can still provide a great opportunity for residential development, such as for flats or for HMOs and can provide an opportunity for tired vendors and publicans to ‘retire’ from the burdens and commitments involved in running a pub, when in many cases it is no longer viable.
We recently helped a client to obtain planning permission to change the use of a public house to self-contained flats and this article explores the principal issues we encountered in the planning process along the way.
This month’s article is focused more on some of the higher level issues relating to change of use, opportunities for extension and conversion and heritage factors. Next month will be concerned with a closer look at the residential amenity and challenges facing the plan layout that we encountered in the case of our recent win.
Negotiating Profitable Exits in Planning Applications
It can be very easy to become fixed on a design or wedded to a particular outcome in planning applications. Much time (and money) will be spent by the client on producing a design that everyone is invested in. The need to make a level of return also for the bank or for investors also can create a degree of either ‘emotional’ or ‘economic’ inertia around scheme.
However, when the planners start ‘poking and prodding’ at the proposals and placing constraints on the scheme, pushing back on the proposed size for instance, then it is very easy to lose sight of the desired outcome.
“Income is vanity, profit is vanity” is a phrase well worth remembering in such situations.
This month we look at this key issue and some other useful lessons from a recently successful application to redevelop a site of a pair of semi-detached houses with a block of 9 flats in Croydon.
Article 4 & Prior Approval: Racing Against Time!
In this month’s article, we look at a recent approval in which we obtained Class MA Prior Approval in the London Borough of Hackney, with an Article 4 Direction due to come in and challenges that we faced that almost prevented a successful outcome, and a few tips for readers as to how you can overcome similar challenges in these situations.
This deeper dive into a recent real case study will reveal potential pitfalls to these applications that required a highly reactive and ‘creative’ response to the challenges that were thrown up.
Reviewing Permitted Development Rights
In 2021, the Government made several significant changes to the permitted development regime, opening up the prospect of new permitted development (PD) rights, especially through the introduction of Class MA which permits the movement from commercial uses under Use Class E to self-contained residential use. Changes were made to existing PD rights in response to some use classes moving out of the former ‘retail’ use class and into sui generis (e.g. takeaways, public houses). Changes were also made to Class G prior approval rights.
This month we briefly revisit some of these changes and flag up principal planning and practical challenges to securing such rights.
Residential Approval in Article 4 Areas and Avoiding CIL
PD and prior approval rights to change from commercial to residential use are widely-known about in the property industry, certainly much more so than in 2013, when first introduced. Although there are still many opportunities that might financially stack on this basis, a lot of sites do not as vendors already price-in the ‘hope value’ to their asking prices.
The need to obtain full planning in some cases for a change of use does put off a lot of SME developers who would rather stick to PD or prior approval strategies, and this in turn creates more opportunity for those developers ‘in the know’ and prepared to take on these challenges to unlock their potential.
We recently obtained full planning permission in just such a case for Leufroy, an experienced developer, in the Royal Borough of Kensington and Chelsea (RBKC) to convert roughly 3,500 sqft of secondary office space on the upper floors of a building in Notting Hill Gate to 4no self-contained high-end apartments.
Getting Class MA Permitted Development Applications
Class MA permitted development applications are often seen as an ‘easy win’ by many developers. However, this route to obtaining consent for commercial to residential development is often grossly underestimated and is not as straightforward as is often believed to be.
Planning authorities have become increasingly knowledgeable of these permitted development rights and poorly prepared or complacent applications will be susceptible to refusal, often costing developers and investors time and opportunity.
This article looks at the most common ‘bear traps’ that we have experienced in the last couple of years whilst this permitted development right has been running.
All references to Class MA in this article are to the Town and Country Planning (General Permitted Development) Order 2015 as of 7th February 2023.
Serviced Accommodation & Planning Use Classes
The area of serviced accommodation has been an attractive and innovative area for developers and investors for many years, often being a catalyst for bespoke property education courses focussing on this sector.
However, it has often thrown up confusion and conflicting advice to those believing that it is straightforward in planning terms and flexible, no matter what your intended business model or property set-up.
This month, we will take a look at a few of the cases around this area to highlight some of the key issues and reflect on some practical considerations. This is not intended to be an exhaustive review of all of the key case law or planning appeal decisions, and planning or legal advice should be sought in any specific case if in doubt, especially to avoid the possibility of planning enforcement action at a later date, the forfeiture of a lease or breach of finance terms.
2022
Planning for Opportunity in 2023
As we come to the end of a turbulent year economically and politically, it is a time when many of us will be kicking back to take a well-earned break and just breathe a sigh of relief over a glass of mulled wine – or something stronger!
However, it’s also a time to reflect on possible trends and opportunities for development in 2023 and to consider where we might take balanced risks and make this coming year a good one for property development or investment.
I am not an economist nor is what follows intended to be investment advice. There is no substitute for independent due diligence and proper enquiries and none of what follows can release readers from such an obligation. However, as a chartered surveyor and planning and development consultant, often at the coal-face with our own clients, the following observations are, I hope, at least a trigger for further thought and investigation.
Class MA Revisited Part 2: Building Upwards
Amongst all of the ‘doom and gloom’ regarding the UK’s economic performance, cost of living and rising interest rates, many in the SME development community are still finding and exploiting opportunities for development using permitted development rights, especially the wonderfully useful Class MA permitted development right.
As consumer spending over the next 12-18 months is likely to be severely constrained by rising fuel and food costs and increases in interest rates add pain to mortgage costs, these challenges are likely to place further pressure on already-struggling secondary and tertiary retail and commercial pitches, in turn prompting opportunities to exploit Class MA permitted development to change these premises to flats and houses.
In the May edition of the magazine, we walked you through a Class MA case that we took through planning for a High Street premises that had become vacant as a result of recent economic turbulence. Since then, we added further value for the client by adding another floor on top to create another 2-bedroom flat. This has given this scheme additional useful profit margin, much-needed to ensure the continued economic viability of this scheme.
Development and Local Democracy
Our Town and Country Planning system is built on the workings of local democracy, with the principle that, save for notable exceptions in permitted development, local bodies and neighbours should be consulted on development plans and proposals and that Councillors, in Planning Committees, should be involved in planning decision-making not delegated to officers.
The need for engaging with people locally is often seen by developers as an inconvenience to be avoided if at all possible.
However, as we have seen already in national policy and we are seeing in the Levelling Up and Regeneration Bill, currently passing through Parliament, public engagement with local Councillors, residents of non-statutory bodies (e.g. local residents or amenity societies, heritage societies, conservation advisory bodies) is likely to be more commonplace. Furthermore, doing so can make sense in terms of long-term strategy, building ammunition if needed for appeals and strengthening a case that may be called in to go before the Planning Committee.
Making a Case Following Refusal of Permission
Finding decent opportunities in the market is for many property investors and developers a daily task involving speaking with agents, using online search tools to look for vacant or ‘opportunity’ sites or other ways of trying to find a ‘gem’ of a deal.
How to Make a 30% Profit on GDV Just Through PD Rights
Local planning authorities are not great fans of permitted development and prior approval, especially of the new Class MA permitted development rights, which make it easier for developers to convert redundant shop and office space to much-needed new apartments in town centres and High Street locations.
In a recent case, in the London Borough of Richmond-upon-Thames (RoT/ the Council), we helped a client to get prior approval through in a ‘race against time’ before an imminent new Article 4 Direction came into force, which would have meant that a full planning permission would have been needed.
The case proved to be more difficult than it might appear on the face of it, but in the end will return about 30% profit on the gross development value (GDV) of the project – just through using the new PD rights.
The Levelling up and Regeneration Bill 2022
We are in the early stages of the consideration of the Levelling Up and Regeneration (LUR) Bill. There is of course a journey ahead before what has been announced actually becomes law, and the detail of what will apply remains uncertain.
The Government has said that it expects that changes to planning procedures will begin to take place from 2024 – once the Bill has Royal Assent, and the associated regulations and changes to national policy are in place.
The Bill is a long one – it contains 196 provisions and 17 schedules (which set out the more detailed changes). There is a 248-page ‘Explanatory Notes’ document. Currently, it is subject to scrutiny in the Committee stages in the House of Commons, so it is yet to go back to the chamber of the Commons (Third Reading of the Bill) and go through the House of Lords.
Development Opportunities: Small can be Beautiful!
For many SME property developers and investors, the prospect of building a property development business or portfolio can seem exciting, yet daunting, not least due to the complexities of the UK Planning system.
The alternatives in terms of finding and developing properties whilst adding value through planning approval can range from obtaining lawful development certificates to regularising a previously unlawful residential conversion, through to Prior Approval particularly under new Class MA rights, or through to full planning permission.
This article looks at a recent case study that presents at a very simple and straightforward level the typical challenges faced on the latter through full planning applications.
Class MA Revisited: The Devil is in the Detail!
The Class MA permitted development right has now been with us for just over 12 months. As applications proceed through the planning system, local planning authorities are beginning to adapt to the new rules and the strategies around them.
In this month’s article, we look back at a recent case study where we obtained Class MA Prior Approval and consider the key learnings from this.
HMOs, Flats & Planning Enforcement
The degree to which kitchen and cooking facilities are allowed in HMOs can often cause considerable confusion among developers. This can arise mainly due to overlap between Planning and Housing licensing regimes.
As a result, it is not unusual for developers to inadvertently find they are under investigation from the Council’s Planning Enforcement Team for converting a property into flats that do not meet with national space standards.
In this article, we look back on a recent case with one of our clients, how the problem arose, and how this was resolved.
Optimising Development Under Class MA
Permitted development rights under Class MA came into force from 21st April 2021 (SI 2021 No.428). In the time since then, local planning authorities have been adapting to the changes to permitted development rights and seeking to understand and apply their limitations whilst trying to manage severe pressures on time and resources.
Alongside this, in a highly competitive climate for convertible stock, with soaring build costs, developers are under pressure to find as much value as possible from conversion and development schemes.
These two factors require a considered and strategic approach to these applications to manage risk and time, as well as enhance the prospect of consent for the optimum number of units, in the least possible time.
All references to Class MA in this article are to the Town and Country Planning (General Permitted Development) Order 2015 as of 7th March 2022.
Planning for HMOs: Opportunities and Pitfalls
HMOs remain an attractive investment vehicle for many developers and, in some parts of the UK, the strength of rental values and the local market for student- or professional-lets compounds this attraction and outperforms build-to-sell strategies or self-contained flats.
In looking for such opportunities, it is important to be mindful of the planning issues and opportunities often engaged. Therefore, this article offers a reminder of these points from our experience.
‘Major’ Challenges: How We Added £10m in Value Through Planning
Last month, we took readers through a recent client success story involving a site with a single storey small community hall in which we secured consent for 9 new apartments and a health centre.
Continuing this story, we now move on to the next stage of the project, which recently resulted in a consent for a new 3-storey development comprising 20 new apartments in North London, making use of changes to the Use Classes rules (as well as other planning strategies) along the way. In total, permission for the scheme has added approximately £10 million in development value to the site.
HMOs, Flats & Planning Enforcement
The degree to which kitchen and cooking facilities are allowed in HMOs can often cause considerable confusion among developers. This can arise mainly due to overlap between Planning and Housing licensing regimes.
As a result, it is not unusual for developers to inadvertently find they are under investigation from the Council’s Planning Enforcement Team for converting a property into flats that do not meet with national space standards.
In this article, we look back on a recent case with one of our clients, how the problem arose, and how this was resolved.
Optimising Development Under Class MA
Permitted development rights under Class MA came into force from 21st April 2021 (SI 2021 No.428). In the time since then, local planning authorities have been adapting to the changes to permitted development rights and seeking to understand and apply their limitations whilst trying to manage severe pressures on time and resources.
Alongside this, in a highly competitive climate for convertible stock, with soaring build costs, developers are under pressure to find as much value as possible from conversion and development schemes.
These two factors require a considered and strategic approach to these applications to manage risk and time, as well as enhance the prospect of consent for the optimum number of units, in the least possible time.
All references to Class MA in this article are to the Town and Country Planning (General Permitted Development) Order 2015 as of 7th March 2022.
Planning for HMOs: Opportunities and Pitfalls
HMOs remain an attractive investment vehicle for many developers and, in some parts of the UK, the strength of rental values and the local market for student- or professional-lets compounds this attraction and outperforms build-to-sell strategies or self-contained flats.
In looking for such opportunities, it is important to be mindful of the planning issues and opportunities often engaged. Therefore, this article offers a reminder of these points from our experience.
2021
Planning in The ‘New Normal’
This time last year, we were only a few months into sweeping new changes to the planning system, which opened up the possibility of new permitted development rights and new use classes. Changes in the law always take time to test and filter down to the reality on the ground, either through planning applications, appeals or later judge-made law through High Court cases.
One such case we have been dealing with over the last 18 months demonstrates the need to adapt and be flexible as new opportunities arise, but also the challenge that this creates for dealing with local planning authority officer, who are themselves often trying to adapt to this change.
How to Deal with Delays in Planning Applications
This month, I thought it would be useful to look back at our recent experiences in how officers tend to deal with PD and Prior Approval applications, and how we have sought to deal with delay in planning applications. This also provides an insight as to how applications are dealt with and the steps they have to go through; even if you cannot do much about it, it is important to be aware of it, so readers can build the costs and possible extent of delay into their appraisals and manage expectations with investors and others.
‘Air Rights’ Prior Approval: The Sky’s The Limit?
Last month, we took readers through a recent client success story involving a site with a single storey small community hall in which we secured consent for nine new apartments and a health centre.
Continuing this story, we now move on to the next stage of the project, which recently resulted in a consent for a new 3-storey development comprising 20 new apartments in North London, making use of changes to the Use Classes rules (as well as other planning strategies) along the way. In total, permission for the scheme has added approximately £10m in development value to the site.
Conversion and Stress: Part Two
Last month, we took readers through a recent client success story involving a site with a single storey small community hall in which we secured consent for nine new apartments and a health centre.
Continuing this story, we now move on to the next stage of the project, which recently resulted in a consent for a new 3-storey development comprising 20 new apartments in North London, making use of changes to the Use Classes rules (as well as other planning strategies) along the way. In total, permission for the scheme has added approximately £10m in development value to the site.
Conversion and Stress: Part 1
Last month, we took readers through a recent client success story involving a site with a single storey small community hall in which we secured consent for nine new apartments and a health centre.
Continuing this story, we now move on to the next stage of the project, which recently resulted in a consent for a new 3-storey development comprising 20 new apartments in North London, making use of changes to the Use Classes rules (as well as other planning strategies) along the way. In total, permission for the scheme has added approximately £10m in development value to the site.
Planning a Way Forward in 2021
Last month, we took readers through a recent client success story involving a site with a single storey small community hall in which we secured consent for nine new apartments and a health centre.
Continuing this story, we now move on to the next stage of the project, which recently resulted in a consent for a new 3-storey development comprising 20 new apartments in North London, making use of changes to the Use Classes rules (as well as other planning strategies) along the way. In total, permission for the scheme has added approximately £10m in development value to the site.
2020
Where There’s Muck There’s Brass!
Last month, we took readers through a recent client success story involving a site with a single storey small community hall in which we secured consent for nine new apartments and a health centre.
Continuing this story, we now move on to the next stage of the project, which recently resulted in a consent for a new 3-storey development comprising 20 new apartments in North London, making use of changes to the Use Classes rules (as well as other planning strategies) along the way. In total, permission for the scheme has added approximately £10m in development value to the site.
Flooding and Planning: Sink or Swim?
Last month, we took readers through a recent client success story involving a site with a single storey small community hall in which we secured consent for nine new apartments and a health centre.
Continuing this story, we now move on to the next stage of the project, which recently resulted in a consent for a new 3-storey development comprising 20 new apartments in North London, making use of changes to the Use Classes rules (as well as other planning strategies) along the way. In total, permission for the scheme has added approximately £10m in development value to the site.
Building Local Support
Last month, we took readers through a recent client success story involving a site with a single storey small community hall in which we secured consent for nine new apartments and a health centre.
Continuing this story, we now move on to the next stage of the project, which recently resulted in a consent for a new 3-storey development comprising 20 new apartments in North London, making use of changes to the Use Classes rules (as well as other planning strategies) along the way. In total, permission for the scheme has added approximately £10m in development value to the site.
How To Turn Refusal Into Permission In 8 Weeks
Last month, we took readers through a recent client success story involving a site with a single storey small community hall in which we secured consent for nine new apartments and a health centre.
Continuing this story, we now move on to the next stage of the project, which recently resulted in a consent for a new 3-storey development comprising 20 new apartments in North London, making use of changes to the Use Classes rules (as well as other planning strategies) along the way. In total, permission for the scheme has added approximately £10m in development value to the site.
Build, Build, Build: Understanding The Planning Reforms
Last month, we took readers through a recent client success story involving a site with a single storey small community hall in which we secured consent for nine new apartments and a health centre.
Continuing this story, we now move on to the next stage of the project, which recently resulted in a consent for a new 3-storey development comprising 20 new apartments in North London, making use of changes to the Use Classes rules (as well as other planning strategies) along the way. In total, permission for the scheme has added approximately £10m in development value to the site.
From a Tired Suburban Office Into a £7m Residential Conversion
Last month, we took readers through a recent client success story involving a site with a single storey small community hall in which we secured consent for nine new apartments and a health centre.
Continuing this story, we now move on to the next stage of the project, which recently resulted in a consent for a new 3-storey development comprising 20 new apartments in North London, making use of changes to the Use Classes rules (as well as other planning strategies) along the way. In total, permission for the scheme has added approximately £10m in development value to the site.
How we Helped Create an Annual Income of £85,000 Within 12 Months
Last month, we took readers through a recent client success story involving a site with a single storey small community hall in which we secured consent for nine new apartments and a health centre.
Continuing this story, we now move on to the next stage of the project, which recently resulted in a consent for a new 3-storey development comprising 20 new apartments in North London, making use of changes to the Use Classes rules (as well as other planning strategies) along the way. In total, permission for the scheme has added approximately £10m in development value to the site.