Permitted development rights (PDR) hit the headlines again last week, when the Labour Party joined a raft of objectors, ranging from the Town and Country Planning Association to MPs in the House of Commons Housing, Communities and Local Government Committee.
Labour’s housing spokesman John Healey called for changes of use to only be allowed with planning consent; the current PDR regime does not require a formal planning process.
However, I want to highlight some of the benefits of PDR – in many cases the catalyst to revitalise town and city centres afflicted by shabby and vacant office buildings.
Gerald Eve research shows that one in 10 new UK homes has been delivered through PDR in recent years and in locations ranging from Sutton, Basildon, Hounslow, Stevenage and Harlow to Nottingham, more than 50% of new homes have been delivered in this way.
Having more people living in town and city centres should help retail footfall. At Palace Capital, we have adapted our acquisition strategy to reflect this city-centre living and working trend.
There are safeguards that provide protection from excessive use of PDR. Article 4 exemption – which restricts permission from being granted without a formal application – has been used in locations as varied as the City of London and Brighton, where the councils are primarily concerned about the loss of office space, making this tool an important curb.
Listed buildings are, rightly, exempt from PDR, as no one wants to see our towns’ and cities’ heritage ruined. This is why the bulk of properties converted have been tired post-war office buildings, which is welcome.
A rise in commercial values has also been a natural brake on PDR for developers and investors.
We recently secured £26.5m of funding for our Hudson Quarter mixed-use development in York and placed a £35m contract with Caddick Group to build the scheme. As the owner of a 100,000 sq ft 1968 office block on the site, we investigated whether a PDR conversion might make more sense than a full-scale redevelopment.
But our calculations showed that converting the building would only allow 61% efficiency of the floorspace due to its dated design. The redevelopment plan results in 81% efficiency as well as delivering a quality design and modern place to live and work.
That said, at Palace Capital we know PDR is positive and the catalyst to rejuvenation of many town and city centres. It is no exaggeration to say that PDR has helped central business districts in many regional cities to mitigate any slowdown that might have resulted from the UK choosing to leave the EU.
Planning permission is an arduous and costly exercise, which can take months to secure and is in no way guaranteed. There is a shortage of housing across the UK, which is generally blamed on housebuilders.
While housebuilders have an eye on shareholder return, government initiatives such as Help to Buy will not achieve the aim of increasing supply, whereas PDR is a useful tool to increase supply, make housing more affordable and enable the younger generation to ‘get on the ladder’.
Richard Starr is executive director of Palace Capital