Written evidence submitted by London YIMBY and PricedOut [PDR 048]
About London YIMBY
London YIMBY is a campaign group that aims to end the housing crisis with the support of local people.
PricedOut is a campaign group focused on making housing affordable to people priced out of homeownership and people priced out of the areas they want to live. We believe there is an acute housing crisis in England, and sustaining a marked increase in housebuilding in high demand areas will begin to address the problem.
● What role should permitted development rights (PDR) play in the planning system?
Permitted development rights have existed for many years and are in general an indispensable aspect of the planning system which allow property owners to respond to changing needs in their local areas. One major failure of the current planning system is that it is incredibly slow to respond to changes in demand, to an extent that would have horrified the creators of the 1947 system. They would never have anticipated that planning permissions could become so scarce and so valuable as they are in many areas today.
The current stock of English planning permissions (including permissions for existing buildings to exist) is worth very roughly three trillion pounds. In a plentifully supplied system, that value would be far lower. It has been inflated by unnecessary scarcity, with appalling human and economic costs. That shortage of planning permissions and homes has increased inequality, damaged health and the environment, reduced average wages and opportunities, and forced people to have fewer children than they would have wanted. It is a scourge on our democracy.
The increased flexibility that has resulted from the expansion of permitted development rights in commercial property will allow local areas to respond dynamically and help to prevent the death of high streets by bringing new footfall into the area. In the case of commercial to residential conversions, this is an important way for developers to contribute to meeting the substantial unmet need for homes. It is, however, worth noting that the recent amendments to the proposed right, and in particular the reduction in the floor area of buildings covered by the right, will substantially reduce its effect.
It is important to remember that high streets as we know them today are a relatively recent phenomenon, having evolved over the last few centuries. Before then, commerce was more often carried on out of people's homes. High streets adapted to become what they were fifty and twenty years ago. If high streets fail to adapt again today, they will perish. The demand for shops has decreased and, although the demand for cafes and other services has increased, they also require footfall, which requires people.
For many centuries there was complete freedom to change the use of a building. The prohibition on changes of use dates only from 1947. It has been a blunt tool: it cannot, for example, ensure the retention of a fishmonger, or a cherished local cafe. Instead, the best and most successful high streets such as, for example, Marylebone High Street, have often been under the ownership of a single landowner, who can capture the benefits of leasing to a few popular tenants such as a fishmonger that may help to draw custom to the high street but cannot afford to pay the same rent as another fast food shop. On the other hand, under fragmented ownership, each landlord is likely to rent to the highest bidder. Controls on use have never been able to help with that.
At present business rates are considerably higher than council tax, which may mean that on the margin some premises that would be more efficiently retained for commercial use will be converted to residential using permitted development rights. That tax discrepancy should be fixed through property tax reform, as we have argued elsewhere.
Another mistaken argument about permitted development rights relates to creating ‘slums’. In general, people choose to live in a particular home because that is the least bad option they have. There are exceptions where the benefits system forces someone into a home that is not fit for human habitation, and we should fix the benefits system. If the welfare system did not force involuntary occupation of substandard homes, we could be confident the reason why any given home was occupied was because, in the absence of that home, the residents’ options would be even worse.
That is why we need clear-headed, systems thinking about housing. If we mandated a minimum size of 3,000 square feet per new home, we would not solve the housing crisis: we would make it worse for many people, because far fewer homes would be built.
The important question is, in the absence of this particular option, what will happen to those people? we see too many misguided opinions or, at worst, crocodile tears from people complaining about ‘substandard’ homes who refuse to endorse real solutions to the housing crisis. In the latter case, there is sometimes a more concerning aspect to their concerns; that they do not want people on low incomes living near them, and ostensible concern about the welfare of those people is a convenient way to ensure those people have even worse options.
● What is the impact of PDR on the quality and quantity of new housing, including affordable and social housing?
Change of use accounts for a substantial proportion of new housing supply in England, making it an important element of overall housing supply in the absence of a radical boost in other channels. Improving housing supply is the major long term solution to decades of worsening housing affordability and it is essential to keep market costs down. While there has been some concern that PDR reduces the availability of affordable housing, by definition commercial uses have no affordable housing, so this is inaccurate. With that said, government could and should reform PDR to ensure that developments though PDR cover necessary costs of new infrastructure, including affordable housing.
● What is the impact of PDR on local planning authorities, developer contributions and the provision of infrastructure and services?
The current complete exemption of PDR from contributions for infrastructure distorts the incentives to convert to housing. In a variety of cases, additional residential space will require additional infrastructure, and developers should face those costs. Otherwise, some conversions will happen that overall damage social welfare because the costs will outweigh the benefits.
● Is the government’s approach to PDR consistent with its vision in the Planning White Paper?
Yes, the expansion of PDR and including affordable housing requirements into PDR are broadly consistent with the government’s Planning White Paper vision, provided that the various wrinkles in PDR as currently implemented are addressed. It can be a welcome step towards an appropriately flexible planning system that responds quickly to local need for housing of all types.
With that said, it remains to be seen how much a single one-size fits all approach can be taken at national level. The extensive limitations on the new PDRs for upward extension mean that they are in many respects less ambitious than, for example, the recent Croydon SPD on intensification or the Haringey SPD on upward extensions in South Tottenham.
Many suggested approaches to reform are based on the false premise that planning and housing is a zero sum game. In fact there are plentiful ways to add many more high-quality homes while improving overall social welfare. The planning system needs substantial improvement to achieve that.
● What is the impact of PDR on the ability of local authorities to plan development and shape their local communities?
By definition, PDR means that local planning authorities have less ability to limit development, but it should be borne in mind that their powers are already restricted. Local planning authorities only have power to permit, and not to compel development. There are many countries and cities in Europe and across the world with successful entirely by-right planning regimes, where what may be built is determined in advance. England’s mainly discretionary planning system has proven incredibly slow to respond to changes in demand, resulting in appalling distortions and housing shortages that have exacerbated social and regional inequality and damaged welfare in a manner that would have horrified the original creators of the planning system. Particularly as we look to a future post-pandemic world, there are many commercial properties lying empty due to lack of local demand when they could easily be converted into residential uses where there is enormous unmet demand. If there is pressure to convert from commercial to residential uses, this only demonstrates how poorly we have failed to meet demand for housing. That has done enormous damage to young people and those on low incomes.
Local authorities should be able to require that designs of new buildings and extensions are acceptable in style for their local communities. That has been a lacuna in many PDR rights that the Government is now seeking to address. There is no need to reduce the volume of what can be built, and differences in style rarely add significantly to construction costs in areas of the greatest housing shortage, so local control can be given without fear of damaging the supply of new homes.
● Is the government right to argue that PDR supports business and economic growth?
Yes, the government is right to say that PDR supports business and economic growth. PDR allows property owners to convert their properties to the most in-demand form of use; whether that is a different commercial use, or residential use. In the case of high streets with empty commercial properties, converting some to residential uses would not only provide much-needed homes, it would increase footfall in the area and support other shops and commercial uses, maintaining the viability of high streets and helping move towards the concept of a “15 minute city”. Flexible planning systems are likely to be far more effective at supporting business and economic growth than our current planning system, which can often at best be slow and unresponsive, and at worst unpopular and actively obstructive while still failing to ensure high quality outcomes.
● What is the impact of PDR on the involvement of local communities in the planning process?
By its nature, PDR reduces the role of local communities in the planning process. As such, there is a tension between PDR and the problem that the Government identified in the White Paper that the planning system has ‘lost public trust’. There should be no tension, however, between a clear, rules-based approach, and building public trust in the system. There are many systems around the world with rules-based approaches and higher levels of trust in their planning system that we have.
In general, planning reform has gone in circles for decades now, with each top-down reform followed in short order by a reversal, often by a government of the same political colour. We think that a fruitful way forward may be with supplementary approaches that let very small communities decide for themselves to allow and to capture the benefits of new development, as for examples through the ability for individual streets to set their own design codes to allow additional development and intensification. Such an approach has been recommended for trial by the RTPI, the Centre for Cities, and most recently the Strong Suburbs report from Policy Exchange set out how a detailed proposal might work. We believe that would be a much more powerful way to add new permitted development rights of enormously greater scope, with local support.
● Should the government reform PDR? If so, how?
● Ensure that PDR rights can be subject to local design codes as to style, so that local communities can have no scope for complaint that their preferences are not being met;
● Expand the set of developments for which clear rules are set in advance so that local areas can sustainably meet demand for housing and adapt to changing economic conditions;
● Ensure that building regulations – and in particularly the liability and insurance regime for outsourced building regulation verification – are up to scratch so that new PDR developments meet good safety standards; and
● Ensure that there is a level playing field between PDR and non-PDR developments as to charges or levies for infrastructure, including affordable housing.