The Government has finally made its position on Permitted Development Rights clear, through its Housing and Planning Bill.
In what must be one of the worst kept secrets in planning legislation, PDRs have been extended forever (ish), and will now allow for the complete demolition of offices, as long as they are replaced by housing.
For those who haven’t been keeping up with the latest in planning legislation – what else have you been doing? – Permitted Development Rights allow for the conversion of office space to residential use, without going through the burdensome planning process.
For those of us who stroll past empty, cavernous office buildings on the way to our shoebox flats, this seems pretty good, doesn’t it? Landlords and developers are incentivised to redevelop empty space for a use that is severely undersupplied, especially in London.
This, in part, reflects the increasing pressure on the Conservative Government to provide homes on Brownfield sites, as the Green Belt lobby in their constituencies continue to exert pressure. It also reflects a (potentially misguided) desire on the part of the government to breathe life into downtrodden high streets.
Depending on where in the country you are, the effects are dramatically different. In London and the south east, this is not just about unused office space but about a drastic reduction in available office space with small businesses being pushed out of existing premises in favour of the greater yield generated by residential.
Over the longer term PDRs are likely to put increasing pressure on office space as exemptions are abolished and as such space can now be completely demolished in favour of residential units, albeit subject to ‘limitations’ that are yet to be announced.
The potential effects on small businesses are obvious. Restricted supply and increasing costs leaves businesses with limited options and risks removing the small business economy almost in its entirety from some areas, which can only be detrimental in the longer term.
There are, however, incentives for local authorities to maintain the supply of offices in their areas. The reform of the way Business Rates are collected, allowing local authorities to keep the money they collect, will incentivise them to maintain a healthy supply of office space and keep revenues flowing. And, as Rates are levied on the square footage of commercial premises, it really is quantity not quality that matters.
The new legislation seems to be quite neat – promoting the ‘Brownfield first’ Conservative mantra (just don’t mention all of that brownfield land which is actually in the greenbelt) – from a Whitehall perspective, but throws up numerous issues at local authority level.
There are now a host of new pressures on local authorities to maximise their benefit, using these new powers. It is vital that local authorities also appreciate the needs of small businesses, and their value, as they begin to utilise them. In London, the LEP is looking at ways of preserving existing, and securing future, space for small businesses through the legislative planning process. This may become increasingly necessary.
We will have to wait and see how pragmatic local authorities become in the face of these changes. One thing is for certain, they now have to balance the need to build more housing, maintain affordable office space and fund their own activities – all of which make for an interesting set of priorities.