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Are Permitted Developments from Commercial to Residential a Good Idea?
- Saulius Bertauskas
- Feb 27, 2019
- 4 min read
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Rob: In today’s question, we are going to be looking at permitted development and at whether permitted development a good thing, generally? And then also, there are investors that I speak to, that are really hot on doing commercial-to-residential permitted development or are considering doing retail to residential, what are your thoughts on permitted development?
Xavier: I think, from my experience, I try and avoid development, like the plague. The whole planning process is not straightforward. I think the central government can get massively frustrating, particularly in housing.
There is a massive shortage in housing and it is very difficult to get the consent. The program, it takes forever. I thought it was a pretty genius vote, actually because overnight they said, you can convert office buildings into residential, without the need to get planning consent.
And there were all these tertiary office buildings around the country, in reasonable locations. But there is the cost of maintaining them and finding tenants for them. They were half-occupied and they gave a whole new lease of life.
Not all the buildings were suitable but a lot were. I think there was an argument to say that they should have restricted central London from it because first of all, you didn’t need to have office buildings converted into residential in central London but those ones they did, obviously, became very highly priced.
Rob: It’s possible that there is a clear argument to say that there is a demand for offices in central London, I would have thought. Or areas of that ilk.
Xavier: Yeah, and also there is a huge benefit to the community, in getting planning consent for residential in central London because they are required to make an affordable housing element and all the rest of it.
So, one of the controversial issues with permitted development was they didn’t really have to do that. They could just get on with it.
Out of town, that would have been, generally, affordable housing but in central London…
Rob: They did not have to jump through those hoops.
Xavier. They didn’t. So, that’s the political aspect which I think, was a missed opportunity.
Rob: Lost in the detail, almost.
Xavier: I think so. Overall, though, I think it’s been a tremendous success. In the last budget, they talked about the potential for converting retail, under permitted development. And that would be very interesting for some of these shopping centres which are really struggling to find a place in the market, where a lot of the retail has moved out of town. As we said before, people are shopping online. So, there are those large, development sites.
The other day I was in High Wycombe where there is a shopping centre which has been eclipsed by another shopping centre in town and other developments out of town and that is all going to be converted into residential.
Rob: I guess you can just see when you’re on the ground, that it doesn’t have the same feel as your newer, swankier residential spaces.
Xavier: But it will be more development than converted, for obvious reasons. Nevertheless, there’s that and that brings back life into the town centre. Looking at things, positively, it could be could be really good for a lot of places.
Rob: Is there anything that you see that is, maybe, a missed opportunity, from a permitted development perspective that people should be considering or looking at. Are there any angles that you can see?
Xavier: I think, generally speaking, it is a really good idea, because it short-circuits the planning regime. Now, a lot of people, probably would not want that. Also, it tends to be brownfield sites rather than greenfield sites. So, I think it should be positive.
The time it takes to get planning consent and the cost is so significant, it is huge and they’ve got that all out of whack. And local authorities are under pressure, themselves. The departments have shrunk and they can be funny and terribly difficult. With some of these places, it is possible to get to meet the local planning officer to even talk about it properly.
So, I think, by using this cleverly, they might have learned some lessons from the earlier times they did it, it could be very effective.
Rob: So, worth considering in the future as a nice, middle ground, that works for all parties.
Xavier: And there is still a massive shortage in residential, generally and of course, institutions are being drawn to it. They call it PRS. Companies like Legal & General have serious plans to invest in residential but there aren’t short-circuit ways to achieve it.
Rob: Interesting times ahead.
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