Is the Current Climate Encouraging Changes of Property Use?

 

In England, generally, if you want to change the use of a building, you require planning permission. However, some changes of use are covered by ‘permitted development rights’ meaning planning permission is not required.

To qualify for permitted development rights, there is strict criteria. For example, as the Planning Portal explains, agricultural buildings can be converted to residential (use class c3) under permitted development rights subject to meeting certain limitations and conditions, including:

  • Creation of no more than five separate dwellinghouses (including any previously created under this right)
  • Up to three of the five can be ‘larger dwellinghouses’ (floor space of 100-465m2).
  • ‘Larger dwellinghouses’ can total no more than 465m2 of floor space (including any previously created under this right) and no single dwellinghouse can exceed 465m2.

And, offices (use class B1a) are able to change to residential (use class c3), subject to limitations and conditions, including any permissions related to transport and highways impacts, contamination and flooding risks, and the impact of nearby noise.

With the impact of Covid-19, a long-term housing shortfall, and the ‘death of the high street’ all appearing on our news channels on the regular, we’ve been thinking… will change of use planning become more popular?

To answer this, I’ve delved into the latest government data and analysed trends over recent years.

What is the Most Common Type of Change of Use?

According to the latest data (July to Sept 2020) the most desirable property changes of use in order of highest number of applications are:

  • Other – 1,639
  • Agricultural to residential – 540
  • Office to residential – 459
  • Rental and sui generic uses to residential – 177
  • Light industrial to residential – 91 (tripled since previous data release in mid-2020)
  • Shops and some other specified high – 88 (more than doubled since previous data release)
  • To state-funded school or registered nursery from various – 10

It seems characterful barn conversions remain popular and flexible working trends may be affecting development purposes.

Between April 2014 and September 2020, the number of change of use applications from office to residential decreased gradually, as did the number of applications for change of use from agricultural to residential – suggesting fewer barn conversions than before. Despite this, they remain the most common transformations.

 

Is the ‘Death of the high Street’ Encouraging Change of Use?

The number of permitted development applications for retail or light industrial to residential has remained relatively stable, suggesting a steady amount of shops and factories are being transformed.

With many high street favourites such as Topshop, Debenhams and House of Fraser recently encountering financial issues, could we see this ‘death of the high street’ influence the number of applications for change of use in the coming months?

Well, a government consultation proposing easier conversion of commercial, business and service premises on our high streets to residential properties ended in January. So, we’ll wait with bated breath to see the outcome, but there is certainly interest in supporting new housing delivery.

We’re particularly exited to see progress on Cardiff’s grade II-listed Howells building, which was formerly occupied by House of Fraser. The 27,000 sq ft building needs around £25m of work to make it safe and previous plans have suggested it may be transformed into a luxury hotel, food and drinks outlets, offices, and more.

 

How Has the Pandemic Affected Permitted Development Rights?

Since the enactment of more relaxed permitted development rights in 2015, the total number of applications has been on a downwards trajectory. However, following the introduction of new permitted development rules in Autumn 2019, many developers and homeowners decided to extend, and the number of applications rose slightly.

However, with the breakout of the Covid-19 pandemic in Spring 2020, our world came to a standstill and all numbers tumbled.

It wasn’t until the latest figures in September 2020 that we see the industry beginning to recover to pre-pandemic levels. Not only that, July to September 2020 saw a rise in total and granted applications for prior approvals for permitted developments, suggesting a knock-on effect from the quiet period where processing paused.

What’s Next?

As the pandemic and many lockdowns roll on, we’re becoming better at working with restrictions and, hopefully, with the rollout of the vaccine, we will return to some level of normality in coming months.

We predict that over the next couple of months these statistical releases will show a recovery, following annual trends of increases in the spring and summer, before plateauing.

““We will undoubtedly see a rise in permitted developments over the next 36 months as there will be an unusual amount of business closures in the UK across a variety of sectors, meaning units will become vacant where they were previously let or owner occupied. “This will undoubtedly wash more availability into the sales market at both steady market values and at discounted levels where I expect there to be an influx of motivated and distressed sellers entering the market. In turn, we will see the more opportunistic investors looking to acquire and redevelop alternative properties that will need change of use. “The stars are going to be pretty well-aligned for opportunistic investors in the change of use real estate space. Exactly how distressed the market will become will no doubt be determined by ongoing state support of businesses and the general state and elasticity of the sectors they are in coming out of that support.” ”

Pure Advisory Group
Ben Lloyd
Co-Founder

If you are considering a change of use project and require development finance, our brokers can help. Get in touch today to see how we can help you secure the finance you need.

Article By Tom Lee

March 10th, 2021

Tom is one of the founding members of the company and has been a part of the Pure Group since 2013 playing an integral part of the business’s growth and direction.

He had over 10 years of experience in the real estate financial sector prior to joining Pure with a major bank. Tom has a wealth of experience providing debt advisory on large, complex deal structures for developers and investors across all asset classes, throughout the UK and parts of Europe.

He has built a strong network across the property and finance sector, which enables him to provide a total package solution to his clients and contacts, with whom he has built long standing relationships.

See more articles by Tom

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