Written evidence submitted by the British Property Federation [PDR 007]
- The British Property Federation represents large-scale long-term investors in the built environment. Our members develop property for a variety of uses to hold for rent – commonly commercial property – but increasingly also homes for rent, purpose-built student accommodation and healthcare facilities.
- Our members focus on long-term investment and as such stress great emphasis on placemaking, and therefore all the constituent parts that make a successful place, including homes, employment uses, good public realm, and social, cultural and leisure facilities.
- We supported the Government’s introduction of Class E in the summer of 2020, believing the advantages of allowing conversion between different commercial uses outweighed the disadvantages.
- Reflecting our members’ feedback, however, we have expressed significant concerns about the Government’s policy of allowing Class E to residential conversions, believing it will do significantly more harm than good. We were signatories to an open letter to the Secretary of State in February, signed by 26 trade associations, professional bodies, and community groups, which expressed our reservations.
- Specifically, some of the consequences we fear include:
- The loss of local convenience shops, which communities have come to rely on more heavily during the pandemic of the past year.
- The loss of low value rental units, such as community and cultural uses, which may have low economic value, but high social value and contribute to making great places.
- The loss of shop units that would otherwise be occupied by small businesses and charities.
- The breakdown of retail frontage, which will further precipitate retail decline.
- The location of housing in inappropriate places without any local services, for example on office or industrial estates.
- Further scandal in the supply side with office to residential conversions and speculators using small investors’ funds that then disappear or deliver poor quality housing. (A number of developers in the PDR market have used unregulated, speculative mini-bonds marketed to retail investors. Some have gone bust before schemes are completed. Others have found that the homes that were built were not mortgageable.)
- We should stress that we are not against building homes in town centres. Residential uses can play a key part in regenerating town centres, but we believe that because of the potential adverse effects, residential development should be planned.
- We acknowledge that the Government has tried to mitigate some of the adverse impacts that PDRs can have. Therefore, the new PDR will have a vacancy test and size limit of 1500sqm. There will be some added protection for nurseries and healthcare facilities as part of the prior approval process, and the Government has over the past year applied new conditions relating to space standards and units have access to natural light. Whilst all of these are welcome, none resolve the consequences we have highlighted in the bullet points above. Indeed, some may accentuate the problems. For example, a size limit could drive more PDR development into small units that would be otherwise suitable for small businesses.
What role should permitted development rights (PDR) play in the planning system?
- Permitted development rights are a deregulatory measure, which allow for change of use without the need for planning permission. In the past, PDRs were used mainly to allow for changes of use between different commercial uses that were closely aligned. In that context, they remain a useful deregulatory measure that saves small businesses and their landlords time and resource.
- Many of the concerns with PDRs have arisen of late with commercial to residential use. Some of our members have used the office to residential PDR and it can be done well, with homes that are rated highly by their residents (See for example PDR schemes on Homeviews). It can also be done very poorly though, and there has been a feeling in the sector for some time that the best office buildings for conversion had been done and increasingly inappropriate projects were coming forward.
- Market context will have a bearing on use of commercial to residential PDRs. There will be some areas where commercial values far outstrip residential, but where the opposite is true significant development could take place outside the policies of a local authority’s local plan. In the past, to check this, some local authorities have put in place article 4 directions.
- Whilst the Government can implement policies that counteract some of the adverse impacts of commercial to residential PDRs, a vital aspect it cannot counteract is location. Homes in places that are wholly inappropriate, office parks for example, or in places that damage ‘place’, breaking up a retail frontage for example, or removing uses that create diversity and footfall.
- Diversity has been important in policy making. The High Street policy of successive Governments over the past decade has been to encourage social, community and leisure uses on to the High Street (Post Offices, Healthcare, nurseries and creches, etc) that give people multiple reasons to come into town and therefore also to shop.
- More generally, it is well-recognised by Government that the best town centres do not just happen but require active co-ordination at a local level. The NPPF policies support this approach, as do the objectives of the High Streets Task Force and the guidance for both the Towns Fund and the Future High Streets Fund.
What is the impact of PDR on the quality and quantity of new housing, including affordable and social housing?
- Our experience of office to residential PDRs are that they can be done extremely well and be popular because of their location, particularly for a young demographic, who like having access to city centre amenities and public transport. They can be done very poorly, however, both in terms of build-quality and location. The Government has sought to tighten up on build-quality through space standards and requirements for the provision of adequate natural light in all habitable rooms.
- What cannot be taken account of via a national PDR policy is appropriate location and for residential use that is very important, dictating how accessible peoples’ homes are to local services.
- What is also surprising in national policy is the lack of any design emphasis, given the Government’s strong emphasis on design in current policy, with changes to the NPPF to reflect ‘beauty’ recently consulted on, as well as the introduction of a National Model Design Code. Developers will have higher standards to meet in the future if they go via the normal planning process, which we support, but there will be a part of the market that use PDRs and have no design standards in arguably places where design is very important, such as the nation’s high streets.
- This policy of no design standards for PDR is even more difficult to fathom, give the predecessor retail to residential PDR had design considerations as a condition of prior approval.
- So far as quantity is concerned, PDRs have historically made a modest contribution to housing supply. About 12,000 units in 2019/20, compared to a peak of 19,000 units in 2016/17, the vast majority of this being office to residential conversions.
- There may be other reasons for the introduction now of the new PDR, besides high street renewal. Many local authorities have high housing numbers to meet via the Standard Methodology and are measured on these via the Housing Delivery Test. If Government is to meet its target of 300,000 homes a year by the middle of this decade, without further stoking local controversies on releasing greenfield land, then allowing more of our high streets to be converted to residential use is a quick way of getting numbers, but with the long-term risks we have highlighted to our high streets.
What is the impact of PDR on local planning authorities, developer contributions and the provision of infrastructure and services?
- Financially, PDRs reduce local authorities’ ability to raise funds to mitigate the impact of conversions due to loss of planning gain, yet increases the pressure on local services, such as schools and other social infrastructure. The Government indicated it would seek to remedy this as part of the Planning White Paper proposals, allowing the proposed new consolidated infrastructure levy to apply to PDR schemes. We agree that the delivery of homes should be treated the same, whether they are coming via a normal planning application or via PDRs.
- In a relatively short time, PDR policy could also make a significant dent in local authority finances as council tax generally results in a lower contribution to local authority finances than business rates for the same size property. As far as we are aware the Government has done no modelling, or impact assessment of this aspect of its policy.
- One further strain that is placed on local authorities because of PDRs is on planning resources. Although developers are not being asked to make a full application, there is now a growing list of prior approval criteria that a local planning authority will need to consider and all within the 8-week timeframe. We are therefore pleased to see that Government has increased the fees on PDRs. Our members, however, fear that the shorter timeframe for PDRs may still pull resource away from full applications.
Is the government’s approach to PDR consistent with its vision in the Planning White Paper?
- As highlighted elsewhere in this response there is significant inconsistency between recent PDR policy and the Planning White Paper, most notably on:
- Design – The Planning White Paper (PWP) places a great deal of emphasis on beautiful and sustainable places with a whole ‘pillar’ devoted to it. The PDR policy has little reference to design, bar some reflection of character and sustainability in conservation areas.
- Developer contributions – The PWP stresses the Government’s intention to apply the new consolidated infrastructure levy to PDR development. PDR policy does not require developer contributions.
- Local plans – Pillar one of the PWP rests on giving clearer directions to developers via local plans. The commercial to residential PDR gives the automatic right to conversion just about anywhere, with no reference to local plans.
What is the impact of PDR on the ability of local authorities to plan development and shape their local communities?
- The policy will put the premises of small businesses at risk of redevelopment. Many businesses have not been able to pay their full rent during the pandemic, and landlords to receive that income. For landlords there will be the temptation to think I can sell up to a developer who will give me a good price for converting to residential use. Speculative developers will see a short-term opportunity, but they may have no respect for long-term placemaking and how the various uses in a town centre fit together. The local planning authority will be powerless to intervene.
- Diversification of the high street could be lost as the PDR threatens the existence of E Use classes uses such as financial and legal services, Post Offices, community centres and hubs, gyms, leisure facilities, education, and co-working spaces.
- At the neighbourhood level, we consider that local centres would be particularly at risk. The loss of local shops and services could precipitate their decline at a time when we are putting greater emphasis on the need for walkable neighbourhoods which provide a range of day-to-day needs in local centres.
- Unlike commercial uses which change regularly, changes out of residential use are quite rare and a change of use to housing is therefore a one-way trip. The community and their representatives will find it very difficult to undo housing that has been built via PDR policies in the wrong place.
Is the government right to argue that PDR supports business and economic growth?
- It is understandable that Government is seeking policies that will stimulate economic activity in what are exceptional times. We welcome Government recognition that our town centres must change, but an all-embracing permitted development right that allows most commercial buildings to be converted to housing risks putting the long-term health of our town centres at risk for the sake of a short-term stimulus.
- There will also be an interesting transition period. The new PDR narrows the scope of office to residential conversions but broadens the scope of retail to residential. That might encourage developers with larger office-based schemes to lodge their prior approvals ahead of 1st August when the new PDR will apply.
What is the impact of PDR on the involvement of local communities in the planning process?
- An automatic right to convert commercial buildings to residential use removes the ability of local communities to engage in the planning process. In its Planning White Paper, the Government highlighted that the planning system has lost the public's trust. We are concerned that the extensive use of permitted development rights in the manner now implemented will lead to a further erosion of public trust and confidence in the planning system.
- Bad development also ultimately affects all developers. Communities will be less embracing of any development if their recent experience is of poor quality and wrongly located conversions.
Should the government reform PDR? If so, how?
- We would rather the Government had not introduced this latest PDR. As part of the consultation process, we had suggested other prior approval criteria that would have mitigated some of its adverse impacts, but not all. Most importantly we had suggested a prior approval matter to consider the impact of the loss of retail and impact on retail frontage.
- The impact on existing retail is a prior approval matter in the existing retail to residential PDR. It is also a prior approval consideration in the new commercial to residential PDR in a conservation area. Where the change of use is at ground floor level, the impact on the character and sustainability of the conservation area is a prior approval matter and addressing this matter could potentially include a limited assessment of retail impact.
- We welcome that one of the other prior approval matters requires the impact of the loss of nurseries and clinics to be considered (where relevant).
- We believe there is an alternative to widescale use of PDRs. The National Planning Policy Framework could give clearer direction that local authorities must plan for town centre renewal. We find there is certainly the will and enthusiasm at a local level to do this. What is often lacking is resource. With resource, local planning authorities could put in place Local Development Orders that are more attuned to what planning flexibilities are needed at a local level to stimulate town centre renewal.
- The Government has for more than a year now stopped the public consumption of a report by the BRE into the fire at The Cube, Bolton. Whilst this may be wholly unrelated, The Cube was an office to residential conversion.