Written evidence submitted by the Association of Town and City Management [PDF 039]
It is important to recognise that there are two key alterations to the Use Class Order System that we are concerned with. Firstly, is the amalgamation of a range of different commercial uses into one ‘super use’ in September 2020 which is the new Use Class E. Secondly is the opening of the new Use Class E to residential conversions.
We welcomed the previous reform of PDR in September 2020 which created the Use Class E. This allowed financial and professional services, restaurants and cafes, shops and businesses to change use without planning permission. The increased flexibility for businesses to change use during the last year provided opportunities for adaptation during a turbulent period for high streets and town centres. With business models rapidly evolving and the lines blurring between different uses, more flexibility around commercial uses is pragmatic. This is where PDR can play a constructive role in the planning system.
Extending PDR to include conversions from commercial properties to residential will permanently and significantly alter these spaces, simultaneously diluting the remaining bricks and mortar businesses on the high street while impacting the value of both surrounding commercial and domestic properties. Such changes needed to be considered alongside issues such as local service facilities, transport and accessibility, employment and education provision and many other issues. PDR should not be used for such a significant change in use.
Even after considering the additions to the prior approval list in the most recent iteration of the legislation, including the protection for health services and ground floor frontages in conservation areas, we believe that PDR is not the correct mechanism to encourage residential use in town centres. We support mixed-use town centres and encourage more residential uses but PDR is a blunt instrument. It is likely to result in the wrong housing in the wrong places and will undermine the viability of our town centres just as they are recovering from COVID-19 restrictions. Our town centres need to be supported by careful planning during this recovery.
The implications of Class E to residential conversions are so significant for our town centres that it is not appropriate for this to be implemented under secondary legislation. An impact of this scale should be subject to scrutiny by Parliament and debated thoroughly through primary legislation.
We believe that if there is a place for Class E to residential conversions it is in locations outside town centres. Commercial uses in these areas exist independent of other businesses and are not reliant on a carefully curated eco-system to thrive.
We acknowledge the challenge and need for more housing while championing the move towards mixed-use development. We support housing in town centres as it is vital for place evolution if executed correctly.
The experience of permitting offices to convert to residential from 2013 demonstrated that, far from being a quick win, poor quality housing with inadequate infrastructure were created.
This change did not take account of the North/South divide. There was a financial incentive to convert offices in the South because house prices were higher although office vacancies were lower. Economic activity was lost as a result. This is the unintended consequence of a blunt instrument. We fear that this recent change to PDR does not consider the new economic reality of the pandemic. It fails to acknowledge the potential for excessive and detrimental conversions by PDR and its impacts.
The current prior approval list is not comprehensive enough to prevent poor quality housing. New additions to the list, like the consideration of noise impacts from existing commercial premises are positive but there needs to be further clarification. Long-established evening and night time economy (ENTE) venues have previously closed due to new residential developments and noise complaints. A measure, similar to the 'agent of change principle', should be included to protect existing ENTE businesses.
Agent of Change makes it the developer’s responsibility to ensure there is no conflict between residents and businesses. The default setting is that long-established businesses have to adapt or face sanctions even though they find themselves unexpectedly co-located with new residential developments.
This could create open discussion between landlords and local authorities about how new homes might be modified to ensure noise from the ENTE is not a problem for the new residents. Reducing conflict between residents and businesses while solidifying what protection they have is vital, especially considering the struggles many ENTE venues endured during the COVID-19 pandemic.
We have significant concerns about the impact on those who rely on local services such as healthcare, postal services and food provision, who will be negatively affected by the PDR change.
Within the prior approval list, mitigating the loss of health centres and registered children’s nurseries is helpful. But the potential impact of residential development on local service provision is more far reaching, one scenario which we can point towards is the necessity of specific health and medical services during the pandemic. Services like pharmacies, are part of the vaccination roll out and will remain critical to the nation’s health in years to come if vaccination is required repeatedly in future years.
PDR reduces income for local planning authorities and is free from affordable housing and other social infrastructure contributions. Through the loss of commercial space there will also be an immediate impact on income for Business Improvement Districts, an important player in the urban place management industry.
There are inconsistencies between the vision in the Planning White Paper and the PDR legislation. Some of these inconsistencies are detailed below:
Consultation with local communities from the very beginning of the planning process. By harnessing the latest technology through online maps and data, the whole system would be made more accessible: PDR allows no consultation with local communities and will almost inevitably undermine any town centre vision that might be developed in consultation with local communities.
Protection of valued green spaces for future generations by allowing for more building on brownfield land and all new streets to be tree lined: Permitted development reuses existing buildings, but people equally value their town centres as thriving places that will be undermined by this change.
Much-needed homes being built quicker by ensuring local housing plans are developed and agreed in 30 months – down from the current 7 years: The quick delivery of housing will remain consistent under the Government’s approach to PDR. However, ‘planning’ in all forms will be undermined as this PDR encourages a free-for-all. Local housing plans are more likely to be hindered by PDR rather than helped.
Every area to have a local plan in place: Similar to the point above, all forms of planning will be undermined with an inability of those participating in the planning process to determine the balance between commercial and residential uses.
All new homes to be ‘zero carbon ready’, with no new homes delivered under the new system needing to be retrofitted in trying to achieve the commitment to net zero carbon emissions by 2050: There is no mention of net zero homes in the proposals for permitted development.
PDR severely limits the capability of long-term planning by local authorities for town centres, undermining high street renewal. Permitting uncontrolled conversions from commercial to residential would remove one of the few tools available, hindering the delivery of new town centre visions and regeneration. We believe that town centres are in a state of flux where opportunities to enable change based on the positive evolution of a place are possible. We know that there are exciting new leisure concepts being developed but they need commercial space to occupy.
There needs to be a level of control in place as the recent extension to PDR creates too many opportunities for a flurry of conversions, the effect of which will be hard to rectify. Buildings converted to residential use will be in multiple ownership and never return to commercial use.
The restriction of Article 4 Directions within PDR hinder the ability of local planning authorities to prevent PDR across a defined area. Although current Article 4 Directions are being carried forward until July 31st 2021, the blockage of new directions is of concern. It will undermine local planning authorities’ future ability to tailor national legislation to respond to local circumstances where the need for control has already been demonstrated and approved by the Secretary of State.
We also have to consider the financial impact on local governments in general. The businesses that will disappear are the exact ones that fund local government services through business rates. Given the financial position local government already finds itself following funding reductions and the growth in need during the pandemic. Although ATCM supports a radical rethink of business taxation, moving away from outdated and unfair business rates, the impact of losing rates income in the short term needs careful consideration to prevent unintentionally making local government financially unviable.
ATCM represents the interests of professionals who are responsible for strengthening our town centres. Our members do not seek to prevent change – it is necessary – but this needs local curation, not a blanket measure. We are very concerned that, as they stand, the extension of PDR could undermine the work of our members and the viability of our town centres.
No, we do not believe that the additions to PDR will support the economic growth of businesses. This change will have a detrimental impact on a number of private sector interests.
First, we are concerned about the impact this has on business confidence when it is already low. In 2020, we have suffered the deepest recession of the G7 (9.9% fall in GDP) because we are a services-based economy. These businesses have accumulated debt due to restrictions to defeat COVID-19. This has meant rents going unpaid during a lengthy moratorium on evictions.
The extension of PDR could undermine these services by further disrupting the workspaces they are reliant on. Serious implications for the future of our economic output could happen if not carefully moderated.
When both trade restrictions and the rent moratorium come to an end, the correct approach is to help these businesses rebuild their balance sheets overtime and nurse them back to health. Instead, PDR will create a license for the eviction of businesses in favour of residential which will give short-term financial relief for them but poses a great danger to the national economy.
One of the biggest impacts on businesses will be the loss of commercial spaces, harming many bricks and mortar enterprises on our high streets. The combination of high residential values, long-standing rental arrears triggered by the pandemic and the extension of PDR will likely lead to business evictions making way for homes. Even with the requirement for a property to be vacant for three months before a conversion can take place this is a very short time and we do not believe that this will prevent the eviction of businesses. For businesses, this extension of PDR is a further threat that will undermine the certainty they need at this challenging period, potentially exacerbating business loss and shrinking our economy.
From this extension to PDR, we are likely to see the loss of retail in core town centres when the future need and retail requirement is unknown. This knee jerk response to increases in vacant property risks resulting in ‘doughnut’ towns and cities where high-value central properties that should be their vibrant cores are hollowed out with residential conversions. The shift from non-domestic to domestic is challenging to reverse, it is a permanent solution to a temporary (but acute) problem.
It is not just retail that we are fearful about. Restaurants, cafes and offices have all been badly hit by the pandemic and need time to recover. This deregulation of planning could mean we see a reduction in these uses unnecessarily.
Evictions would be highly damaging for the private sector, but it is not the only problem. The remaining businesses who are subject to the unplanned break up of footfall generating activities in a commercial destination where PDR is used excessively, or in the wrong locations, similar to the changes in 2013, will have concerns about the impact on spend.
Finally, the reduced availability of commercial properties will increase rents for the surviving businesses, based on supply and demand, at a time when they need more sustainable costs and risks setting back recovery.
In the ‘Planning for the Future’ White Paper, MHCLG presented interesting ideas around modernising and visualising the planning consultation process to build community participation. We feel that was a step in the right direction but it will be undermined by extending PDR. Communities will find it much harder to have any say in how existing commercial property fulfils their needs.
The implemented changes will throw into doubt the future of community participation in shaping high streets and advances in participatory placemaking brought forward by MHCLG, such as Neighbourhood Planning.
We have learned that it is not just occupiers that fear PDR. Even though some commercial landlords may stand to gain in the short-term from PDR even the property sector as a whole appears concerned that poorly thought housing without approval at the expense of existing services will reduce the value of an entire town centre or scheme.
We believe that the Government should reform PDR by removing residential to commercial conversions in town centres. We agree that there is a place in town centres for residential properties, supporting a mixed-use urban space with retail, hospitality and supporting infrastructure. This variety is what makes places unique and attractive, but the balance is delicate. Without planning controls, we may see the over-saturation of residential uses replacing previous independent and chain businesses and crucial community services, hollowing out town centres. To reiterate our point previously, we accept PDR conversions in locations out of town centres.
If the Government remains set on extending PDR for residential conversions in town centres extending prior approval requirements is needed. The prior approval list should include considerations like the agent of change principle that would ensure towns and cities can retain a thriving ENTE. An extension of prior approval should also consider provision of services, good quality affordable housing, transport and waste management.
Designated provision should be available for all town and city centres to be exempt from ground floor conversions, not just conservation areas. Landlords could then still make use of PDR to convert the upper floors of properties to deliver housing, while the retaining active ground floor frontage in urban centres would protect our services-based economy.
Finally, we agree with the principal of speeding up the planning process to allow town centres to respond quicker to change. However, other issues must be considered as part of a package of reform first.
Business rates continues to be a burden on bricks and mortar businesses, distorting investment away from commercial property. Its reform would end this distortion, making commercial property a more attractive proposition bringing its value closer to that of residential and make deregulation of planning more viable.
The existence of fragmented property ownership also continues to be problematic for town centre evolution with little or no coordination. Exploring ideas that incentivise coordination between property owners would also make planning deregulation more viable such as Property owner BIDs or Town Centre Investment Zones.
The Association of Town & City Management (ATCM) is a not-for-profit membership organisation dedicated to promoting the vitality and viability of town and city centres. It has over 200 members including key stakeholders in town and city centres across the UK and Ireland. Most of these are town and city centre management practitioners and active initiatives functioning as partnerships, some with several hundred contributing members. They develop and implement shared visions, strategies and action plans for hundreds of district, town and city centres throughout the UK and Ireland. ATCM has been operating since 1991 and can offer a significant body of experience in the field of place management.
ATCM’s membership consists of a mix of publicly funded town centre managers, Business Improvement Districts (BIDs), Community Interest Companies (CICs), Town Teams and more. They span across the private, public and voluntary sectors and, as a collective, do not have a sector specific agenda. Instead they are focused on the promotion of healthy places for the benefit of all stakeholders.