Does PDR have a chance to change its poor reputation and help revive town centres?

It is no secret that our town centres are facing huge challenges recovering from a period of social and economic stagnation with many trends accelerated by the pandemic.

Initial optimism surrounding the potential flexibility for planning that the introduction of Class E brought about has given way to some real concerns about what impact this could have on the future of town centres.

The conversion of offices to residential has been highly criticised for creating substandard accommodation in locations that fail to create sustainable forms of development. Alternatively, the conversion of obsolete office accommodation has made a significant contribution in the 7+ years it has been in place.

With retail in particular seeing big brand names leaving the high street and businesses shedding office leases, town centres are experiencing more and more vacant property, many of which falls into the new Class E and through Class MA of the GPDO 2021, this could be converted to flats using permitted development rights.

The Government’s intention was to revitalise and energise town centres to support their recovery. But, with most of the easy low-hanging fruit of obsolete office space already converted (and actually demand for office space in such locations experiencing a post-pandemic spike), is the extension of PDR to Class E dredging our town centres for more housing, and what can be done to protect the quality of these conversions?

Or, will the appointment of Michael Gove and a new Department for Levelling Up, Housing & Communities be the tonic for a revitalised set of town centres where quality is front and centre of any Class E conversions?

Either way the Government is committed to delivering 300,000 new homes every year. If the conversion of town centres is on the agenda, then the design of these conversions is crucial to their future.

What is it and how is it different?

Class E was introduced over a year ago and this grouped together retail (A1, A2, A3), offices and light industrial (B1), health (parts of D1) and leisure (D2) under a single use class. With the inclusion of offices into Class E a review of the permitted development rights for office to residential was necessary. Class MA was introduced under the Town and Country Planning (General Permitted Development etc.) (England) (Amendment) Order 2021 and this allowed the change of any Class E use to residential.

Class MA is significantly different from the previous permitted development to residential (PDR Class O) as it now applies to a much wider range of uses (largely found in town centres, including retail), it has an area threshold of no more than 1,500 sqm (150 sq m for retail) and it applies to buildings in conservation areas, but not listed buildings. The building must have been vacant for three consecutive months, not listed and must have been Class E for two years prior.

In 2020, the Govt introduced additional permitted development powers under the Town and Country Planning which included the demolition of vacant commercial buildings to create new resi accommodation.

PDR is attractive to developers and landowners as it does not require affordable housing provision, however the Community Infrastructure Levy (CIL) still applies.

Local Authority Response

In response to the new permitted development rights, and to protect their town centres, many Councils renewed or extended Article 4 Directions. Previously these mostly covered offices, business parks and London’s CAZ. More recently these are utilised more across town centres reflecting the concern of many LAs that the range of uses now capable of changing to residential potentially threatens the commercial viability of their town centres.

To avoid blanket Directions across whole LA areas, the new National Planning Policy Framework (2021) states that Directions should only be used to avoid wholly unacceptable adverse impacts, to protect local amenity or the well-being of the area, based on robust evidence and limited to the smallest geographical area.

Is it Working?

Quantity wise, PDR has been a huge success with 64,798 dwellings recorded from office to residential alone in the five years from 2015 to 2020, (MHCLG Live Table PDR1).

Croydon tops the table as the authority with the largest number of dwellings created from the conversion of its offices (3,217 in the 5 years). This is more than likely due to the abundance of older office space within the Borough, rising residential values coupled with its general drive for regeneration. Birmingham sits in second place with 1,760 dwellings, significantly less. The top 20 authorities are all either outside of London or outer London Boroughs, with the exception of Lambeth at 18th place with 809 dwellings. This is not surprising when the entirety of London’s Central Activities Zone has had its PDR removed, however, the more likely explanation is the more even balance between commercial and residential values in these locations.

Locations where residential values far exceed those of commercial property PDR will still be more attractive, despite the cost of conversion and a slightly below market value residential product. Much of this property, the older office stock in good residential locations, has already been converted or redeveloped. This is reflected in the slow down from 259 PDR applications in London in July-September 2014 to just 48 applications in April-June 2021. The Government’s extension of PDR to Class E therefore appears to be an attempt to squeeze more homes out of vacant commercial property.

The introduction of Class MA extends the potential to other properties, particularly those that lie vacant within town centres. Not only the offices but also the many other services that supported those offices. In many cases these may be in peripheral locations that need to be revitalised. We must be careful however, as these could also include locations that are temporarily struggling while things are still settling down following the pandemic. But should we realistically rely on PDR to revitalise our town centres?

Prior Approval

PDR has been widely criticised for the poor standard of accommodation being created. The Local Government Association has raised particular concerns stating that PDR results in poor design, it fails to contribute to create sustainable and well-designed places; and creates worse living environments. An RICS report in May 2018 stated that the quality of office to residential schemes ranged from high to extremely poor and “significantly worse” than those which had been through the full planning process. Similarly, the comprehensive Govt-commissioned research by the Bartlett School of Planning in 2020 found that the majority of PDR failed to meet adequate design standards and crated poor living environments with only 22.1% of surveyed homes meeting Nationally Described Space Standards and only 3.5% having access to private amenity space.

These reports don’t suggest that PDR will add much to our town centres and there is a suggestion that they may even be detrimental their future.

To address the flaws identified in the report, the GPDO was revised to require a demonstration that the development will not suffer noise impacts from neighbouring uses, for adequate daylight; and, where the proposal involves the loss of a ground floor use in a conservation area, an assessment of the impact of that loss on the character or sustainability of the conservation area.

In an attempt to put an end to the delivery of small homes, the former Housing Secretary, Robert Jenrick, announced in September 2020 (following the publication of the Barlett study) that all new homes delivered through permitted development rights would have to meet the Nationally Described Space Standard and local design codes. This was then reflected within an amendment to the GPDO later in 2020 for Class O (office to residential). It has been carried into the new Class MA (Class E to residential) through a requirement that plans must identify the area of each dwelling.

A more general requirement to meet space standards came into force on 6 April 2021, through an amendment to Article 3 of the GPDO. From that date, Article 3 states that the GPDO does not grant permission for any dwelling that would be less than 37sqm or would not comply with the Nationally Described Space Standard. This will therefore apply to all classes of permitted development that permit dwellings, including Class MA.

The National Model Design Code was published in July 2021 and this includes the Nationally Described Space Standards (NDSS) space standards for dwellings as a guide for local authorities to produce their own design codes in accordance with the NPPF. The approach endorsed by the Building Better, Building Beautiful Commission and quoted heavily in the White Paper places a significant emphasis on beautiful buildings, however, excellent design should also create an excellent standard of accommodation and this sentiment is now reflected in the GPDO.

In conclusion, PDR is an extremely effective tool to deliver significant numbers of new housing from surplus property in a relatively short time. The downside is that this has historically allowed the creation of substandard accommodation. With the extension of these powers to traditional town centre uses we can expect to see the conversion of parts of our centres that have been ravaged by the pandemic. It is impossible to say whether these would ever recover or whether the introduction of more residential to our town centres would prejudice their future. Perhaps this is all part of the evolution of our town centres, as online retail activity increases, the core retail areas are consolidated.

A new town centre community emerges that benefits from the locational advantages of being close to transport and services, which in turn contributes to the vitality and growth of these centres. To do this effectively and in a way that will endure and create such thriving centres across the UK in line with the much-discussed levelling up agenda, Michael Gove simply must turn his eye to design and instil checks and balances to these conversions so that pride, performance and a positive culture returns to the high street.

This article has been published in the Autumn addition of the ACES' Terrier publication which can be found here.