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Repurposing Retail – Planning Considerations - Part 2

In Part 1 we set out the challenges owners and developers of retail property are currently facing and how the repurposing of retail space offers an effective and innovative solution. We continue to explore the planning implications in repurposing in this Part 2.

Planning obligations

Where a local authority cannot impose planning conditions, they may require developers to enter into planning obligations through Section 106 agreements. 

This may be relevant where the local authority wants to ensure the proper management and maintenance of a site/property (e.g. landscaping, public realm, rights of access etc.). It may also deal with local policy requirements such as the preparation and ongoing implementation of travel plans, local employment and training, energy efficiency and the use of renewables. 

If a repurposing scheme includes new residential development, the local authority may require obligations relating to the provision of affordable housing and also, the provision of additional affordable housing (or a contribution towards the provision of affordable housing) if the viability of the development is re-assessed.

Community Infrastructure Levy (CIL)

CIL may need to be taken into consideration particularly where a repurposing scheme creates new floorspace. Different types of new development can be subject to different rates of CIL – so it is important to understand from the outset what any potential liability maybe based on the rates set out in a local authority’s CIL Charging Schedule. Development carried out using permitted development rights can also be liable to pay CIL.

Site wide repurposing and compulsory purchase

If site wide assembly is required for major repurposing schemes developers could consider asking the local authority (at the developers’ cost) to use compulsory powers to acquire land and interests. Compulsory purchase stops developers being held to ransom by owners trying to maximise value unreasonably and not wanting to sell at market prices. The payment of compensation to such parties will be in accordance with the statutory compensation code and disputes over that price will not hold up entry or acquisition of ownership of the land.

Where ownership of any part of the site is unknown, procedures are available to ensure that the land can be acquired. If the development causes interference with the rights of third parties after the procedures have been applied (for example, a right of light) then whilst compensation might have to be paid for any interference with rights, that interference cannot entitle the third party to an injunction preventing the development from taking place.

In a planning context, local authorities can compulsorily purchase land if the authority thinks that the acquisition will facilitate the development, redevelopment or improvement of land, or acquisition is required in order to achieve the proper planning of an area. This can be demonstrated where planning permission is in place for a repurposing scheme. 

Scheme Viability

In agreeing the scope of planning applications, conditions and planning obligations, CIL owners and developers will need to ensure that the totality of these components results in a scheme that is viable and is deliverable.

Viability will need to be assessed and revisited throughout negotiations with the local authority. Planning conditions and obligations should be scrutinised to ensure that their requirements do not place an onerous burden on a scheme (e.g. connections to infrastructure, provision of additional energy infrastructure etc.) that would result in it becoming unviable.

With CIL, owners and developers should consider whether any reliefs or exemptions apply in the context of the proposed repurposing scheme and should ensure that all claims for relief are made in accordance with the CIL regulations so as to benefit from them. The local authority may also allow for the phasing of CIL payments which may assist in working out cash flow for a scheme. This may only be available where a planning permission is phased (each phase of the development being treated as if it were a separate chargeable development for CIL purposes).

Heritage protection

If repurposing a listed building, listed building consent may be required to demolish, alter or extend it particularly where the works affect its character as a building of special interest. This is a separate consent from planning permission and may be required in addition to planning permission or by itself for works, such as internal alterations, that do not constitute “development” and therefore do not require planning permission. It is a criminal offence to carry out works to a building without having first obtained listed building consent and the local authority can prosecute, take listed building enforcement action or apply to the Court for an injunction against an anticipated breach of listed building control.

The listing of a building may also prevent certain permitted development rights applying, particularly if it is a specific condition of the relevant class of permitted development.

Also where a property or site is located in a conservation area, there may be specific policies (particularly around design that preserves the character of the conservation area) that developers will need to consider and incorporate into their planning applications.

Final note

For owners and developers that are thinking about repurposing vacant retail space, the key here is to plan ahead. A lot of consideration needs to be given to local planning policies which will guide the strategy for developing a successful repurposing scheme.

Where a planning application is likely to be required, owners and developers should engage with local authorities at an early stage and discuss proposals. Seeking pre-application advice will help to sound out any material planning concerns and guide planning applications.

Such discussions will help owners and developers to work out what options for repurposing are feasible and financially viable to bring forward.

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