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Light Industrial - Preaching to the converted

Permitted development rights have in recent years been extended to light industrial units. To quote from an official Government press release from October 2015, new measures are being put in place to make it easier to turn underused commercial buildings into new homes: "thousands more homes to be developed in planning shake up". But the very lack of regulation that is freeing up sites for redevelopment is also a cause for concern.

New rights to convert property from light industrial use (Class B1(c)) to residential (Class C) were introduced in the Town and Country Planning (General Permitted Development) (England) (Amendment) Order 2016 - "the Order". First introduced in 2013, temporary permitted development rights initially enabled offices to be converted to new homes without the need for the developer to apply for planning permission. Take up was significant, with many thousands of conversions being given the go-ahead, and the temporary rights relating to offices were subsequently made permanent.  The Order is a further example of the Government seeking to cut through the red tape and bureaucracy that previously hampered the conversion of underused commercial and industrial space into new homes, by further deregulating and simplifying the planning regime.

Planning permission is not needed when the existing and proposed uses are within the same "use class", or where the Order specifically permits a change to another approved use class.  For example, under the latest updates to the legislation, which came into force on 23 May 2017, shops, offices, casinos, amusement arcades and agricultural buildings may all be converted to Class C3 dwelling houses, subject to "prior approval" by the relevant local planning authority. Prior approval will cover issues such as flooding risk, contamination, highways and transport issues and noise impacts on the intended occupiers of the development. But planning permission is not required.

There are obvious advantages for developers in the absence of regulation under the new regime. Developers will be able to achieve quicker project timescales from identification of a possible site through to completion of the redevelopment.  There are also potential cost savings for developers - for example in the absence of a requirement for planning permission, there will be no obligation to make a Section 106 contribution.

But developers should also be wary of the relative freedom now afforded to them when converting office and light industrial sites to residential. The key question to ask should be, is the existing building appropriate for conversion to residential use at all?  

A good quality site in a good location may be a more expensive investment but is likely to ultimately provide a better return than a poorly chosen site. There is no advantage in rushing to redevelop a building without considering its context, the available local amenities and transport links. Redeveloping a light industrial building in an area that is already largely residential would seem a far safer bet than a similar scheme in an industrial zone that lacks the amenities people would want when they move into an area. Developers also need to consider the impact of their development on the existing community - if, for example, increased traffic and transport strains will materially affect the quality of life of local residents, this may be off-putting for potential buyers.

Marketability of a development is also dependent upon quality - the generosity of the living space and amenities within a scheme and the quality of finish and materials. It would be a mistake for potential developers to cut corners on quality in order to realise cost savings, simply because the lack of regulation allows them to do so. For the developer to make a profit and the development to be successful, someone is going to have to want to live in the converted units.

Potential investors and buyers will share similar concerns. Is the scheme in the right location - close to amenities and transport links? Are those amenities and transport links capable of sustaining a new development? Is the development of sufficiently high quality?

In a deregulated environment, the temptation can be for developers to focus too much on whether they could redevelop a site, and to lose sight of whether they should.

This article first appeared on the Construction Manager website on 9 August 2018. John Wevill is head of Construction, find out more about our services here

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