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Analysed: The price of permitted development rights

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The use of permitted development rights is costing communities and council planning teams dear – but the government wants to extend them

allied house leicester check

allied house leicester check

Offices have been converted into homes above a nightclub in Leicester

Kids forced to play in car parks, flats built without windows and other homes stuck on top of a nightclub. According to research by University College London for the Royal Institution of Chartered Surveyors, these are all recent examples of developments carried out under a fast-track planning route that the government wants to extend. 

These permitted development rights, the long-standing route used for carrying out small scale house extensions, means developers do not need to secure full planning permission.

However, critics argue this stripped back version of planning, which was extended in 2013 to cover the conversion of office blocks and warehouses into housing, is creating the “slums of the future”.

A consultation paper issued following last November’s Budget proposed a dramatic further extension of this regime. The government’s proposals, which it has recently finished consulting on, include using PD rights to rebuild commercial buildings and add extra floors to existing residential properties without having to seek planning permission.

Instead, the works would only have to secure a prior approval, which requires minimal checks only for flooding, noise and transport impacts.

The most immediate hit for councils has been to the bottom line of planning departments. Local authority planning departments are not able to charge as much for processing a prior approval as they would for a conventional planning application.

A prior approval fee typically works out at £80 to £95, says the RICS study’s author Ben Clifford, a fraction of the sums they could charge for a formal application.

And while handling a prior approval means less work, it could still be several days’ worth of planning officers’ time to process a substantial conversion, he says.

In addition, councils will often put prior approvals on top of the pile because the development will be automatically granted if it has not been processed within 56 days, Mr Clifford says.

The findings of separate and as yet unpublished research by UCL, shared with LGC, estimates that Leeds City Council has lost £745,000 over the four years since the PD rights regime was extended.

Over the same period, Leicester City Council was more than £490,000 out of pocket due to loss of fee income. This loss of income puts additional pressure on planning departments which have suffered heavier cuts than any other branch of local government, according to recent statistics from the Chartered Institute of Public Finance & Accountancy.

Local planning authorities’ resources are further stretched by the need to monitor the quality of the developments. “It doesn’t cover costs: council tax payers are subsidising this process,” says Richard Blyth, head of policy at the Royal Town Planning Institute.

The financial hit from PD rights on local government doesn’t stop there. Those carrying out conversions using the PD route do not have to pay planning gain contributions.

leeds and leicester

leeds and leicester

Lost planning income since the permitted development rights regime was extended in 2013

These include the financial contributions developers pay for affordable housing. Homelessness charity Shelter has calculated that the loss of these contributions has meant more than 10,000 affordable homes going unbuilt over the past three years that would otherwise have been provided through the planning system.

Councils are also losing the income other types of section 106 contributions generate for mitigating the impact of development, like upgrades to roads and contributions towards extra school places.

Mr Clifford, who is a senior lecturer at UCL’s Bartlett School of Planning, told LGC his research shows that Leicester has lost £3.2m in s106 contributions on developments given consent via PD.

This matters because residential developments have different infrastructure requirements from the workspace they have replaced, he says. “An office needs hard infrastructure to get to and from but it doesn’t need children’s play spaces and community centres.” 

Amenity space has not been provided in around 90% of units delivered through PD rights, the RICS research has estimated. 

Another consideration for councils is that the inherently unplanned nature of the developments being carved out of former offices and industrial units complicates the planning of service delivery, says Henry Smith of the Town & Country Planning Association, which is running a campaign against the PD extension.

The poor quality of many PD conversions means they have been hard to let, which leads in turns to the kind of high turnover of tenants that can breed anti-social behaviour, says Mr Clifford.

The government’s justification for extending the PD rights regime is the pressing need for additional housing. Ministers have pledged to increase housing completions to 300,000 a year by the end of the current parliament.

Changes of use under PD rights from non-domestic to residential have created 32,000 homes over the past two years, according to the government.

But the picture is more nuanced than these headline figures suggest, says Mr Clifford, based on his analysis of completions in Leeds and Leicester in 2009-13 and 2013-17, the four-year periods before and after the PD rights extension.

This, he says, shows that while overall completions rose, the number of new-build properties that required planning permission fell. On this basis, he argues that the true level of additional housing is around “half” the number of new homes it is claimed conversions have brought about. This is because construction companies are carrying out conversions rather than new-build.

“There has been a diversion of investment away from new-build to conversions because they are more profitable: they’re not all additional housing,” says Mr Clifford.

Mr Smith agrees: “It’s taking capacity from builders to do new-build so it’s not really additional.”

And while councils may have been guilty in the past of over-allocating land for employment purposes, the  extension of the PD free-for-all runs the opposite risk, warns Mr Blyth. 

A study commissioned by Hertfordshire’s local economic partnership seen by LGC, shows a net loss 771,000 sq m of commercial floorspace across the county over the past decade, which is equivalent it estimates to the total floorspace in St Albans, Watford and Welwyn Garden City put together. 

Of this, 271,000 sq m is accounted for by PD conversions, which make up the “vast majority” of the increase in commercial floorspace lost over the past 10 years, concludes the study by commercial property agents Lambert Smith Hampton. It says: “The scale of loss, and the inability to avoid the loss of good quality and in-demand floorspace, is creating serious imbalances between supply and demand in the market.”

The loss of small units in particular, which it describes as a “noticeable” consequence of PD rights, threatens the growth potential of start-ups and other SMEs, it says.

“We won’t have anywhere for people to work unless they work in Deutsche Bank,” says Mr Blyth.

Hertfordshire CC leader David Williams (Con) says he is “extremely concerned” about the government’s plans to extend PD rights, adding that it is contrary to the government’s desire to promote better place-making.

“The inability to retain control over the best and most versatile employment spaces and sites completely undermines our objective to support and develop key sectors of the local economy and will make the delivery of an effective local industrial strategy more challenging,” he says.

Responding to concerns about PD rights, communities secretary James Brokenshire told LGC he is “determined to speed up the planning system and make the housing market fair for everyone”.

“Increasing the availability of affordable housing is vital and under permitted development rules, 32,000 homes have been delivered in the past two years. But I’m also committed to ensuring that what we build, whether from scratch or through conversion, is built to last, is designed well and adheres to building regulations.”

The latest consultation moots allowing councils to secure planning gain contributions on PD developments.

Nevertheless Mike Kiely, chairman of the Planning Officers Society, warns that the proposed reforms risk a “complete emasculation” of the planning system. “If you don’t like the planning system just be honest and get rid of it,” he says.

The former Croydon LBC chief planner says PD is recreating the social problems that existed over a century ago when planning emerged, partly as a response to the public health problems of the Victorian era.

“This is why we have a planning system: we had these problems of slum dwelling back in history, and planning and public health came out it. This is just winding the clock back.”

The numbers

unchecked development

unchecked development

 

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