The government’s ambitious planning bill, expected in the autumn, now hangs in the balance. The real estate industry is waiting to learn whether the government goes ahead with reforms despite the political risk, or whether it makes concessions and backtracks on key pledges.
There is much riding on that decision. The radical reforms announced in June 2020 aimed to make it easier to build homes by introducing greater flexibility in use classes, expanding permitted development rights and, ultimately, overhauling England’s planning system.
Some of the changes have already been made. The first came into force last September with the expansion of certain PDR and a change to use classes, introducing class E for a range of “commercial, business and service” space. That allowed the government to expand PDR to more commercial buildings, effectively fast-tracking potential conversions to residential.
The next step for the government is unveiling its planning bill as parliament returns from its summer recess. Here, EG looks back at the work already done and ahead to what could be on the horizon.
Rapid changes and consultation
The government initiated changes to planning legislation with three statutory instruments on 20 July 2020.
These allowed for the construction of two new storeys on top of certain buildings for use as flats; the demolition of detached flats or commercial buildings if they are replaced with purpose-built homes; and the introduction of use classes E (commercial, business and service), F1 (learning and non-residential institutions) and F2 (local community).
Most significantly, class E incorporated retail, food, offices, gyms, healthcare, some services and light industrial uses in one category. The immediate effect was greater flexibility for landlords to change the use of commercial space – a change of use within one class does not require planning permission.
In the longer-term, class E set the stage for an expansion of PDR, which could allow for the conversion of most commercial property into residential space without full planning permission. The government then launched a December consultation over allowing a change of use from any use within class E to residential under PDR.
Expansion of PDR
In March this year, communities secretary Robert Jenrick confirmed plans to introduce PDR for all class E property to residential. “We are creating the most small business-friendly planning system in the world to provide the flexibility needed for high streets to bounce back from the pandemic,” he said at the time.
Legislation followed swiftly in the form of an update to the General Permitted Development Order. This saw the introduction of class MA allowing the change of use from class E to class C, housing. It extended PDR to conservation areas but with some additional steps. However, caveats later added included that a building must have been vacant for at least three months, must have been commercial and could be no larger than 1,500 sq m (16,145 sq ft).
Changes introduced in August addressed some concerns from the industry, including fears about the effect of allowing PDR without size limits. Other previous restrictions included a ban on developing homes smaller than 37 sq m through PDR, while legislation required “a provision of adequate natural light” in such developments.
In the month leading up to the August ban on large PDR schemes, the number of proposed PD homes soared to 6,859 – four times higher than the monthly average for the rest of the year according to EG Radius data. Parties pushing through new schemes ahead of the ban included Diageo, which lodged an application to convert its former HQ into a block of 200 rental flats.
At the same time, the government updated the National Planning Policy Framework, restricting the use of Article 4 directions, a provision of PDR legislation that allows local planning authorities to withdraw PDR.
Under the new wording, Article 4 directions are limited to situations where their use is “necessary to avoid wholly unacceptable adverse impacts” such as the loss of a primary shopping area, or where they are “necessary to protect local amenity or the wellbeing of the area”, such as requiring planning permission for the demolition of local facilities.
In effect, the government broadened the amount of commercial space that could be converted into homes without full planning permission at the same time as limiting options for planning authorities to restrict those rights.
The industry reacts
The expansion of PDR was met with widespread condemnation. The day after Jenrick announced the legislation, EG reported that major stakeholders “had been blindsided”, with the legislation produced before the findings from the December consultation were published.
The British Property Federation quickly raised concerns with the legislation scrutiny committee, arguing that the move – rolled out during the Easter recess – “curtailed scrutiny”. Ian Fletcher, director of real estate policy at the BPF, said that “poorly planned PDR homes will do more harm than good”, adding that the result could be “a piecemeal approach, without taking into consideration what the entire high street requires to successfully serve the community”.
Fears included the loss of essential local services on the high street if developers choose to pursue residential conversions “to make a quick buck”, in the words of Victoria Hills, chief executive of the Royal Town Planning Institute. The consultation also found “strong opposition” to PDR in protected areas, with only a third supporting it in conservation areas.
A group of trade bodies – the Royal Town Planning Institute, RICS, RIBA and the Chartered Institute of Builders – wrote an open letter to the prime minister asking him to “urgently reconsider the measures”, arguing that the new measures would not help the crisis on the high street and would instead “risk creating poor-quality housing.”
But there were also arguments for expanded PDR. Will Agnew, associate director in the residential development at Colliers, outlined the case for and against. The argument for PDR suggests that “small pockets of land can be scooped up to create residential infill sites”. Maintaining the status quo of the high street is not always beneficial, while additional housing could stimulate the local economy.
What’s next?
The Queen’s Speech in May 2021 confirmed that the government is pressing ahead with its planning system reform, which started last August with the publication of the planning white paper.
The proposals were ambitious, outlining plans for a zonal approach to planning, which divides the country into areas earmarked for “growth”, with automatic outline approval, “renewal”, with an assumption of planning approval in principle, and to be “protected”, with restricted development. It also included plans to replace section 106 and CIL with a new infrastructure levy to speed up developments and require the local authorities to put out new local plans within 30 months. Simplification and speed were the overarching themes.
Since August, however, the proposals have run up against hurdle after hurdle. The response from the industry has been mixed: while some welcomed a simplified planning process and an emphasis on high-quality design codes, others raised concerns about unanswered questions. How can a three-zone system effectively replace a discretionary system without hurting local democracy? Will the proposals help deliver affordable housing? Is the planning system even the problem?
The support some proposals garnered have been drowned out by backlash against the reforms. In June, the cross-party housing, communities and local government committee called on the government to reconsider its zoning plans. The committee’s 135-page report evaluating the planning proposals concluded that it did not believe the overhaul would produce “a quicker, cheaper and democratic” system.
Meanwhile, a by-election defeat in Chesham & Amersham that same month spooked Conservative MPs who viewed the Liberal Democrats’ victory in the area – the first ever non-Conservative victory in the constituency – partly as a response to concerns over planning reforms.
Nearly 100 Conservative MPs warned the prime minister in early August that they would oppose the planning bill, which, combined with Labour’s commitment to vote against it, could spell trouble for the government. The coming weeks and months will be the greatest test for the government’s “build, build, build” mantra.
