Contributors
While an earlier Government consultation had proposed it, the temporary office-to-residential permitted development right was not extended with the coming into force of a new General Permitted Development Order 2015 (GPDO) for England on 15 April 2015. This means that the right still comes to an end on 30 May 2016. No further guidance has been provided on what needs to be done by this deadline to ensure that the change of use may be retained permanently.
Background
The office-to-residential permitted development right (PD right) was introduced in April 2013. In the new consolidated and amended GDPO the relevant class is Class O. This states that "development consisting of a change of use of a building and any land within its curtilage to a use falling within Class C3 (dwellinghouses) of the Schedule to the Use Classes Order from a use falling within Class B1(a) (offices) of that Schedule ", shall be permitted development; consequently such a change of use will not require a full planning application.
However, restrictions apply to the PD right; "before beginning the development, the developer shall apply to the local planning authority for a determination as to whether prior approval of the authority will be required as to -" transport and highways issues, contamination and flooding.
Importantly the PD right is time limited. This means that the use of the building approved under the Prior Approval (PA) will in practice need to be "begun" by 30 May 2016, because any use begun after that date will not be permitted.
Planning Practice Guidance
The planning practice guidance (PPG) confirms that the permitted change of use from offices to residential applies between 30 May 2013 and 30 May 2016. The PPG states that the right "allows development to be retained permanently provided that development is completed by 30 May 2016" (paragraph 033, PPG).
The subsequent paragraph 034 PPG states that where associated physical development is required to implement the change of use, developers should consider whether it constitutes development and should ensure they have planning permission if necessary.
Paragraph 034, PPG then states that if physical building work or change of use is not "completed" by the date specified in the GDPO (i.e. by 30 May 2016 for office to residential), then enforcement action could be taken, or it may be necessary to make a fresh planning application. This would bring with it other considerations such as loss of employment space, the need for mixed uses which include active street frontages at ground floor level, affordable housing need, and other planning gain more generally.
The issue
There is an apparent discrepancy between the GPDO and the PPG which is creating a fair amount of uncertainty. The GPDO requires the "use" to have been "begun" on or before 30 May 2016 and the PPG requires the "development" to be "completed" by that date. The GDPO leaves room for debate on the extent of the change of use which is required to be affected by 30 May 2016 in order to keep the PA alive.
The question is whether this should be interpreted to mean 'actual occupation of the building for residential purposes', or 'completion of the physical works need to alter the use of the building'.
What may need to be considered?
The Town and Country Planning Act 1990 (TCPA) section 91 provides that every planning permission granted or deemed to be granted shall be subject to the condition that the development to which it relates must be begun within three years. But this provision does not apply to any planning permission granted by a development order.
The time limit imposed by the GPDO on the PD right has the same effect, which means the question arises - what is required to keep a PA alive; i.e. what is required for a finding that the use of the building, approved under the PA, has been begun by 30 May 2016?
This question has attracted a number of commentaries. At one end of the spectrum it has been suggested that it will be sufficient provided that one unit of residential use is physically altered within the building by the relevant date. At the other end of the spectrum it has been suggested that not only does all the conversion work have to have been completed, but all residential units in the converted building must also be occupied by the relevant date.
This illustrates that the question of what will be required to keep a PA alive is far from straightforward and there may be a number of matters to take into consideration.
There is case law in an enforcement context which supports the position that fit out without actual occupation is sufficient for a change of use to have occurred. However, how much earlier a change of use may be said to have occurred will be a finding of fact and degree. Because this case law has arisen in the enforcement context it is unclear to what extent it can be applied in this context.
The case law derives from circumstances where either the appellant wishes to show that residential use has taken place in order to gain exemption from enforcement action, or in other cases where it is argued that residential use has not taken place at all. The cases need to be considered with an element of caution therefore. The case law may however provide assistance in assessing at what stage a change of use may be held to have occurred.
What is the extent of the works it will be necessary to undertake to each unit of accommodation?
In summary the cases appear to suggest that, internally the physical condition of the relevant building is a key consideration. It must have at a minimum certain essential facilities required for residential use including, toilet, internal water (washing facilities and drainage for waste water), and adequate washing facilities for food preparation.
However, where external works are contemplated, which affect the external appearance of the building then planning permission will be required for those works.
What is the relevant planning unit?
Whether a material change of use has occurred will also be subject to the concept of the planning unit. Another way of looking at this issue is, if the developer's intention is to subdivide a building into flats (e.g. with multiple units on each floor), is it sufficient to convert one unit to residential purposes to secure permission/ keep permission alive for the whole office block, or must all the flats be converted for residential use before 30 May 2016?
The planning unit concept causes considerable practical difficulty, because the courts are insistent that each case is to be considered on its merits as matters of fact and degree. However, the general rule has always been that the materiality of change should be assessed in terms of the whole site concerned, normally the whole of the area in the same ownership or the same occupation. The consequence of applying this rule is that the larger the unit of ownership or occupation, the less likely is a change in the use of part of it liable to constitute a material change in the whole. On this basis it follows that with a larger unit, to ensure that a change of use can be shown to have occurred throughout the whole planning unit, the necessary conditions for establishing a residential use should be met in respect to the whole building. However, the whole building may not need to be converted in order for residential use to be established in part only of it, e.g. on one floor.
Our thoughts
The current uncertainty means that funders are taking a precautionary approach and are reluctant to lend on conversion projects where there is no certainty that the build can be finished and units marketed and occupied by 30 May 2016. This is exacerbated as current shortages in labour and materials mean that developers face a longer lead in time to programme the necessary works.
The changes to implement the permitted development right were made against the background of the Government wishing to speed up the delivery of housing. In this context the suggestion that the development must be completed by 30 May 2016 is aligned to the Government's goal.
With no extension of the PD right currently in sight, time will be short to bring these schemes forward and developers will be well advised to consider in good time what is needed to keep their PA alive.
