Permitted Development: conversion of commercial buildings to flats

The changes to permitted development (PD) rights to allow for a change of use and redevelopment of commercial premises to residential use have been a useful, if slightly controversial, means of securing a supply of new homes, whilst also providing for the rejuvenation of parts of our towns and cities in England and Wales.  While the draftsman may have had in mind former townhouses-turned-offices converting back, like in the image, the reality is that many more 1950s-90s office blocks have been converted.

In this three-part article, we consider the following aspects of residential conversions:

• in Part 1 – the planning aspects;
• in Part 2 – the ‘landlord and tenant’ aspects; and
• in Part 3 – the leasehold enfranchisement aspects.

Part 1 – Planning aspects of conversion of commercial buildings to flats

Class O of Schedule 2, Part 3 of the General Permitted Development Order 2015 (GPDO) permits the change of use of a building and any land within its curtilage from Use Class B1(a) offices to Use Class C3 dwellinghouses.

Class M contains the following PD rights:

• Use Class A1 shops or A2 financial and professional services (or mixed use A1/A2 and residential) to Use Class C3 dwellinghouses.
• Betting office, payday loan shop or launderette (or the same uses mixed with residential) to Use Class C3 dwellinghouses.

Class N permits a change of use from an amusement arcade/centre or casino to Use Class C3 dwellinghouses.

Availability of PD rights

It is important to check whether the Class O, Class M or Class N PD rights are available:

• Certain areas (listed in Article 2(5) of the GPDO) are exempted from these PD rights being applied (i.e., they do not apply and cannot be used).
• Local planning authorities (LPAs) are able to disapply permitted development rights by Article 4 Direction.
• If a building is a listed building or is in what is termed a ‘safety hazard area’ or military explosives area, neither Class O, Class M nor Class N PD rights can be used.
• If a building is part of a World Heritage Site, neither Class M nor Class N PD rights can be used.
• If a building is in a conservation area, Class M PD rights are unavailable.

Class O rights are also only available where there was a qualifying B1(a) office use on 29 May 2013.  If the building was not in use at that date, the previous use has to have been B1(a) office use.  Class M rights have a similar qualifying use test with a date of 20 March 2013.  Class N rights have a qualifying use test date of 19 March 2014.  The whole of the ‘planning unit’ must have been in qualifying for the ‘qualifying’ use at the relevant date.  If the ‘planning unit’ has a mixed use, the building will be in sui generis use and the PD rights cannot be used.

The rules applicable to Class O changes of use differ from those applicable to Class M and Class N changes of use, but they are similar.  We will concentrate first of all on the Class O rules.

Pre-condition to use of Class O PD rights

A change of use under Class O is conditional upon the developer first applying to the local planning authority (LPA) for a prior approval determination, i.e., whether the prior approval of the LPA will be required as to:

• Transport and highway impacts of the development;
• Contamination risks on the site;
• Flooding risks on the site; and
• Impacts of noise from commercial premises on the intended occupiers of the development.

The prior approval determination is not the determination of a planning application; it is a decision on the specified matters only and the LPA is not able to take into account other considerations that would normally apply, and in particular, is not able to take into account the sufficiency of amenity space that each dwellinghouse has.  The potential lack of amenity space has been a point of criticism of this policy.

The grant of prior approval can be granted on an unconditional basis or with conditions, which must relate to the matters listed above; an LPA is not at liberty to impose conditions relating to matters outside of those listed above.

The form of application for prior approval is not specified and LPAs are not able to force applicants to use a particular form.  Not supplying information at the outset which an LPA may reasonably later request does not mean that an application for prior approval is not to be treated as a valid application.

Timing of development

Development under Class O may not commence until one of the following occurs (the relevant date):

• The LPA confirms that prior approval is not required.
• The LPA gives prior approval.
• The expiry of 56 days following the date of receipt by the LPA of the application for prior approval.

Development must be completed within 3 years of the relevant date.  If the development has only been partially completed within that timescale, it is uncertain what the effect is on those PD rights and no ruling has been made on the point as yet.

Applicability of CIL, SAMM and SANG

Residential conversion may give rise to liability for community infrastructure levy (CIL).  This needs to be considered prior commencement of development.

Near SSSI or other environmentally sensitive areas, Strategic Access Management and Monitoring (SAMM) payments can also due on these schemes and Suitable Alternative Natural Greenspace (SANG) can also be required to be provided, such as in the Surrey or Thames Basin Heaths areas.  As these are town centre sites this SANG need has to be met offsite, but within a defined radius, which has created a thriving market for excess or specifically developed “SANG” land in these areas.

Use of Class M and Class N PD rights

Class M and Class N are framed slightly differently to Class O.  Here are the main differences:

• Most importantly, there is a floor space limit in Classes M and N, which does not apply in Class O. The cumulative floor space of the existing building changing use under Class M or Class N (including any previous change of use under Class M or, as applicable, Class N) must not exceed 150 sq metres.  (Floor space means the total floorspace and includes non-operational and non-usable floor space).  This restriction makes it less likely that Class M or Class N will commonly be used as 150 sq metres does not amount to much in terms of development potential.
• Classes M and N permit building operations that are reasonably necessary to convert the building to a use falling within Use Class C3. Class O does not permit such operations.  Demolition, however, is prohibited under Classes M and N other than partial demolition which is reasonably necessary for the conversion.  Extensions are also restricted – development is not permitted if it would result in the external dimensions extending beyond the external dimensions of the existing building at any point.
• There is still a prior approval process with Class M and Class N development, but this differs from Class O in that it determines whether prior approval is required as to:
• Transport and highway impacts of the development;
• Contamination risks on the site;
• Flooding risks on the site; and
• Whether it is undesirable for the change of use to occur because of the impact on adequate provision of services (shops and financial/professional services) and the sustainability of a key shopping area (if applicable); and
• The design or external appearance of the building.
• The prior approval requirements for Class N are similar to those for Class M, but with the omission of (iv) above.

Proposals for reform

The Government consulted in October 2018 on a proposal to create a new PD class allowing hot food takeaways within Use Class A5 to change to residential use.  In its response to the consultation, published in May 2019, the Government confirm that it will be implementing such an amendment to GPDO.