Permitted Development Rights and the Living Sector

There is increasing interest from residential developers looking at using permitted development rights to convert existing stock for the Living Sector alongside or as an alternative to new build.  Some of the key factors driving this increase in interest include:

1. The timing and uncertainties of the planning process can be significantly reduced by using permitted development rights (PDRs);
2. The volatility of construction costs and pricing of materials has added uncertainties to the financial modelling of new build developments; and
3. An increased focus on reuse and regenerate is encouraging developers and investors to consider “recycling” old buildings as part of carbon footprint considerations. 

Some Living Sector developers are also keen to bring to market a unique product/original community for their tenants.  Redeveloping old buildings can bring an original design to a development through its mix of old and new. 

Permitted Development Rights – what are they?

PDRs arise as a result of a national grant of planning permission pursuant to the Town and Country Planning (General Permitted Development) (England) Order 2015. They allow certain works and changes of use to take place without needing a planning application. 

However, PDRs are not always blanket approvals – they can be subject to limitations and conditions and a defined approval process. For example, Class MA allows for a change of use from a Class E building (such as an office) to a dwelling house subject to certain caveats, including that Class MA is not available if the building in question is listed or is in an area of outstanding natural beauty.

Moreover, anyone wishing to benefit from Class MA must submit an application for “prior approval” to the local planning authority. This means that, whilst a full planning application is not required, the local planning authority would still evaluate the impacts of the proposal on local transport, flooding, noise etc and may refuse the application. 

Permitted Development Rights – how are they removed?

Despite the need for prior approval, Class MA can be an incredibly useful tool for those in the residential development sphere - but PDRs will not always be available. The local planning authority can issue an “Article 4 direction” that all or part of a PDR does not apply to a particular area. 

Developers looking to convert office buildings into residential could be concerned that such a direction could be made during the course of their purchase and/or subsequent planning/development process.

An authority can issue such a direction at any time – the authority would draft, make, publicize and confirm the direction, and then it would take effect. 

Local planning authorities will typically publish their intention to make an Article 4 direction at least 12 months ahead of the direction taking effect (there is a quicker way of issuing article 4 directions but this is rarely relied upon by authorities as they will be at risk of compensation claims if they fail to give at least 12 months’ notice of a direction.) 

If an Article 4 direction takes effect, you can still rely on the relevant PDR provided that: (i) you obtained prior approval before the direction took effect, and (ii) you complete the works within three years of your prior approval date.  However, if an Article 4 direction is confirmed before prior approval is obtained (whether this is before or after submission of your application), you could not rely on the PDR.

Article 4 directions generally apply to particular areas rather than entire boroughs or districts. For example, the below area edged black shows Westminster City Council’s entire administrative area but only the area shaded red is covered by their most recent Article 4 direction relating to Class MA:

When considering whether or not a particular building would have the benefit of PDRs it is important to look at these plans in detail.  In some cases, a PDR will be available for buildings on one street and then, one road back, they will not. 

PDRs can also be removed by planning conditions and section 106 agreements. Therefore, developers looking to purchase sites with a view to benefitting from PDRs should undertake a thorough due diligence process to establish if there are any existing or proposed Article 4 directions and the planning history does not prevent reliance upon them. 

If you need any advice on PDRs or Article 4 directions relating to residential development, please contact our team of Living Sector solicitors here.