Change of Use Legislation Threatens to Descend into Chaos

Posted on 15 May, 2013 by Neil Bird

The government’s change of use legislation, which is due to come into effect in England on May 30, threatens to descend into chaos as a number of local authorities are believed to be consulting lawyers over their failure to secure exemption.

As we have previously reported 17 local authorities, including large areas of London, were successful in their bids to opt out of the relaxation in rules which will allow the conversion of office property (B1) to residential (C3) without seeking planning permission.

However it is reported that the Department for Communities and Local Government (DCLG) received significantly more applications for exemption and many of these local authorities are now planning legal challenges. This will undoubtedly lead to confusion among landlords and developers and could even delay the introduction of the legislation.

The relaxation of planning legislation is designed to address the housing shortage and reduce the number of empty business premises, many of which are now considered obsolete due to structural changes in occupier demand.

Initially the proposals included all commercial property categories but a lack of support within the industry led to a rethink and the final draft refers only to office buildings. According to consultants Lambert Smith Hampton, if all the  available redundant office stock was converted to residential use, this would create over 11,000 homes – around 25 per cent of the accommodation the government hopes will be built this year.

Crucially the DCLG conceded that there will be areas where the relaxation would not be appropriate and included the right for local authorities to present a case for exemption which would be considered on a case by case basis.

The grounds for exemption are by no means clear and are subject to conflicting interpretation and dispute. To be considered for exemption a local authority must demonstrate that the new permitted development rights will lead to:

  • The loss of a nationally significant area of economic activity, or
  • Substantial adverse economic consequences at local authority level, which are not offset by the economic benefits that the new rights would bring.

The City of London, fearing the loss of valuable business space, was the first authority to announce that it would seek exemption. It was quickly followed by the majority of the capital’s boroughs and local authorities throughout the country.

One of the authorities to present a case was Norwich.  The city’s bid was based on the grounds of local significance and claimed that failure to gain exemption would have wide economic effects. The local authority argued that they have a ‘town centre first’ planning policy aimed to reduce the impact of out-of-town-developments and that this promotes office occupation in the city centre.

This strategic approach, their submission claimed, emphasises sustainable development and promotes the upgrading of substantial amounts of ageing office stock to suit modern business requirements. Norwich’s bid also called for exemption for an area around the airport and an industrial district to the east of the city.

This bid, along with submissions from Sheffield, Liverpool and many other locations, was rejected. Now landlords in these areas must wait to see if their local authorities are among those planning appeals, but the confusion doesn’t end here.

As it stands, owners with nationwide portfolios will find their properties subject to different regulations in different areas. In addition all the authorities whose cases were rejected can still make use of existing powers and restrictive conditions to block unapproved change of use.

If this option is exercised widely it is likely to lead to lengthy planning applications, appeals and possibly claims for compensation where permission is refused. This could leave  landlords asking themselves, what is the point?

Many industry insiders are now arriving at the conclusion that the government’s policy is poorly thought through and will do little to either protect commercial areas or ease the housing shortage. Labour’s planning proposals, which involve adding an additional ‘umbrella’ use class that would be determined locally, appear equally likely to result in confusion.

Perhaps if both parties listened to landlords and businesses and addressed the issue of business rates instead, there would not be the number of vacant properties to warrant discussion.

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