Partner James Birch considers the opportunities and the considerable pitfalls of Permitted Development.
In 2013 the previous government enacted legislation allowing automatic planning consent for commercial buildings to convert to residential called Permitted Development (PD).
This was due to expire in May 2016 but in October 2015 the Housing and Planning Minister announced that the PD rules would be extended indefinitely saying, “Today’s measures will mean we can tap into the potential of underused buildings to offer new homes for first-time buyers and families long into the future, breathing new life into neighbourhoods and at the same time protecting our precious green belt.”
On the face of it one would think this is a very good idea. After all there is a desperate housing shortage and so called “social contributions” demanded from developers for new builds by local authorities provides much needed funds to support their social housing budgets.
In areas around the M25 there is a scarcity of available land outside the green belt for housing developments and this is amply demonstrated by the huge wave of in-fill developments we all see on our roads and in our cul-de-sacs.
There is also an argument that internet communications, super fast broadband and developments in service industry practices coupled with the demise of the traditional office and acceptance of the working from home model means that office space is in surplus throughout the country.
An inspired piece of legislation and a win win for everyone involved.
The trouble with government interference in established rules and practices and the legislation passed to change them is they are generally designed for the short term; after all governments generally last less than the maximum 5 years.
So what is the problem with PD?
Put simply it has the potential to turn our remaining bustling market towns into commuter dormitories.
To truly understand the impact of PD it is useful to look at what has, and is continuing to happen in one such town, Rickmansworth.
In Rickmansworth residential values have increased so much in the last 3 years that most new developments are sold “off plan”. In fact the recent large scale office conversion at the station had buyers queuing all night to make sure they got their name down on open day; the entire development was pre-sold before the previous occupants name board had been removed and certainly before any preliminary works had been undertaken.
A quick glance at “Rightmove” tells me that flats in central Rickmansworth are selling at £700 per foot (sorry I don’t understand the metric system). I am told that the best price paid for commercial space in the town so far this year is £466 per ft for a small building in Church Street with limited parking. This is in itself a staggering number bearing in mind that this time last year I am aware of two slightly larger buildings which sold at an average of £275 per ft.
These numbers tell us two things.
- Firstly that residential is worth more than commercial by a factor of one and half times and so the owners of commercial buildings quite reasonably wish to cash in on the PD rules and the money offered by property developers.
- Secondly that the loss of office space is pushing up the cost of remaining office space by a similar factor.
Many buildings have already gone, at the station, the coach house in Bury Lane for example and others are, I understand, planned for change of use under PD.
From a personal perspective this all seems rather exciting. After all I am the joint owner of a prime piece of commercial property in the heart of the town and believe me I am currently inundated with development offers. If I don’t sell I can get more rent from my tenants on the parts I let out.
The problem is that whilst I’m busy looking at the big pile of cash I just got for my building, where do I and all of the other small businesses move to? The answer is of course that there is nowhere for us to move to because everyone else had the same idea.
For those that do remain rents become so expensive that they are forced to consider alternatives.
The sad reality is that we all end up at some nondescript out of town Business Park on the edge of the biggest town, in our case Watford, far from our local town and all of its amenities, the station, the shops, cafes, restaurants, banks etc that we presently enjoy.
And after we have all gone away the shops, cafes, the launderette, the nail bar etc will inevitably close down because late evening and weekend trade alone is not enough to pay the rent and rates.
When you’re next in Rickmansworth, hopefully to meet someone at Dickinsons, just take a minute to consider how busy it is and how, despite the omnipresence of Watford there are some great little shops, places to meet and eat at, a super theatre, great library and pretty much everything a small town should have. It’s also worth looking up; you will see the development of the town through facades, chimneys etc dating back over centuries.
Now imagine all the shops are gone and so are the people and then replicate that across the whole of the south east; all those lovely little towns.
Not such a great idea was it?