1. 19 April 2012 The Office Agents Society Changes of Use from Commercial To Residential Michael Gallimore Hogan Lovells International LLP

2. www.hoganlovells.com Changes of Use from Commercial To Residential The driver: urgent need for housing, promoting regeneration of under used commercial buildings and bringing empty buildings into productive use. Initial consultation April – June 2011. Summary of consultation responses and Government's response July 2011 2

3. www.hoganlovells.com Changes of Use from Commercial To Residential Consultation response 30% supported the principle of PD rights for B1 uses Concerns: –Effect on availability of employment space –Planning permission would still be required for ancillary works –Impacts depending on local circumstances which are best considered alongside a planning application –Need to safeguard against possibility of inadequate housing in unsuitable locations Everyone thought the idea had been dropped, relying instead on policy … 3

4. www.hoganlovells.com Changes of Use from Commercial To Residential NPPF Para 51: "Local planning authorities … should normally approve planning applications for changes to residential use … from commercial buildings (currently in the B use class) where there is an identified need for additional housing in that area, provided there are not strong economic reasons why such development would be inappropriate." 4

5. www.hoganlovells.com Changes of Use from Commercial To Residential 24 January 2013, Government announcement of new PD rights for offices to be converted into homes i.e. B1(a) offices to C3 residential without the need for planning permission FT:"Ministers believe vacancy rates in office sector running as high as 21% in some regions" "conversions attractive in central London – West End average residential value of £3,000 psf residential against £2,375 psf offices" 5

6. www.hoganlovells.com Changes of Use from Commercial To Residential Government Justification Provision of homes to ease the national housing shortage Creation of jobs in the construction industry Regenerate town centres by increasing footfall in high streets 6

7. www.hoganlovells.com Changes of Use from Commercial To Residential The Technicalities Sunset clause, PD rights in place for 3 years with a review of benefits at that time to consider indefinite extension. Local circumstances vary so LPAs given opportunity to seek exemption if they can show substantial adverse economic consequences. Exemptions will only be permitted in exceptional circumstances. 7

8. www.hoganlovells.com Changes of Use from Commercial To Residential The Exemption Test LPAs need to demonstrate that the introduction of the PD rights in a particular area will lead to: AThe loss of a nationally significant area of economic activity, or BSubstantial adverse economic consequences at the local authority level which are not offset by the positive benefits the new rights would bring 8

9. www.hoganlovells.com Changes of Use from Commercial To Residential Exemptions Exemption applications must relate only to the geographical area justifiable in the light of these criteria. Exemption applications had to be submitted by 22 February Exemptions will be set out in the General Permitted Development Order when published LPAs can still use Article 4 Directions to withdraw the PD rights or conditions on planning permissions 9

10. www.hoganlovells.com Changes of Use from Commercial To Residential Exemption applications 700 applications … delay All but 3 London boroughs have applied (Redbridge, Bexley and Barking & Dagenham) Mayor:CAZ (City, South Bank, West End) Commercial northern part of Isle of Dogs Royal Docks Enterprise Zone Vauxhall Nine Elms Enterprise Zone City Fringe – Tech City Outside London, majority of Metropolitan areas particularly for central business districts 10

11. www.hoganlovells.com Changes of Use from Commercial To Residential Prior Approval Process Tightly drawn prior approval process which will cover significant transport and highway impacts and development in areas of high flood risk, land contamination and safety hazard zones If the prior approval process can't be satisfied, planning permission will be required Planning applications will be determined in light of NPPF para 51 and local circumstances Chief Planner's letter to LPAs 24 January 2013 11

12. www.hoganlovells.com Changes of Use from Commercial To Residential Implications Planning permission still required for associated works e.g. external works to building, re-configured access, improved parking arrangements Loss of affordable housing/S106 obligations CIL, general consent so CIL applies but no CIL if no additional floorspace and building has been in use for 6 of last 12 months when permission granted 12

13. www.hoganlovells.com Changes of Use from Commercial To Residential Implications Quality/sustainability of conversions i.e. concerns re high density residential development in areas without the necessary facilities Suitability of office buildings for conversion; floor plates, communal areas, current occupation and lease profiles Effect on prices/values in the locality both office and residential buildings Potential for nuisance actions by incoming residents into business oriented areas Demand; strong in south-east within M25 but how many exemptions will there be? 13

14. www.hoganlovells.com Changes of Use from Commercial To Residential Next Steps Timing – end May? The fine print of the Order will be critical For example, will there be restrictions on amount of floorspace within a building which can benefit from the change? 14

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