Gove to Loosen Commercial Conversions

Today (11th February 2024) Michael Gove, the Secretary of State for Levelling Up, Housing and Communities, announced the Government would be making further changes to Permitted Development Rights that enable some commercial premises to be converted to residential uses.

Class MA Permitted Development Rights were launched in August 2021, and is a powerful tool which allows commercial properties often found in high streets to be converted to residential uses. The announcement follows a consultation launched in June 2023 which suggested a number of changes to Permitted Development Rights to provide more flexibility to deliver more homes. 

For commercial properties, the Government suggested changes to the following requirements of Class MA: 

Floorspace limits

The original Class MA Permitted Development Rights had a floorspace limit of 1,500sqm, meaning that the conversion of commercial uses to residential could not be over this threshold. However, parts of a building over this limit could be converted, as long as the total area being converted was 1,500sqm or below. This in itself was a massive increase from the 150sqm allowed for under previous Permitted Development Rights.

The consultation proposed increasing the floorspace limit even further to a huge 3,000sqm, which based on today's announcement appears will come into play. The consultation stated that the Class MA Permitted Development Right could deliver a maximum of 20 2-bed flats, which now can be increased to 40 (as long as the 3,000sqm limit isn't breached).

Vacancy requirement 

Class MA Permitted Development Rights require applicants would need to demonstrate that the building was vacant for a period of at least 3 months. This restriction was brought into place to provide some protection to businesses from being displaced. However, it appears the Government considers that this is now no longer effective.

Michael Gove has confirmed that this requirement will be removed. This change is likely to be welcomed by many commercial landlords, as it will reduce the burden required of applicants, and reduce the time buildings are left empty. We still await the details of the specific legislation to see if there are any restrictions in place, for example, Class Q conversions do not allow agricultural tenants to be evicted purely for the purposes of converting the property to residential uses. Given the Government's drive to deliver new housing, especially in town and city centre locations, it is unlikely that similar restrictions will be in place for Class MA.  

Protected Areas 

At the moment, Class MA cannot be used in most Article 2(3) land, which covers designated areas such as National Parks and Areas of Outstanding Natural Beauty. To allow communities in protected landscapes to benefit from Class MA, the consultation proposed removing many of these restrictions. However, it is expected that restrictions in World Heritage Sites will remain.

Additional restrictions are in place if the proposal involves the conversion of a ground floor in a Conservation Area. In these circumstances, the Council is required to assess the proposal for its impact on the "character and sustainability" character of the Conservation Area. These two terms are incredibly vague, and have caused issues for Councils, landlords and promoters as these terms are not explained further in the legislation or associated planning guidance. 

Today's media interviews did not touch on Article 2(3) land, so we await details to find out if new opportunities in protected areas will come to fruition. 

Hotels and Guest Houses

Hotels and Guest Houses are classified as Class C1 in the Planning Use Class Order. Generally, these uses have very limited Permitted Development opportunities, and as such planning permission is required to convert them to residential uses. This can often require applicants to demonstrate that there is no longer a need for the business, including a marketing report showing that there is no demand for a guest house or other commercial uses at the property. Many Councils require a marketing period of 2 years to be completed, which means that these properties can be left empty for years on end, making them vulnerable to vandalism and theft. 

The consultation proposed either including hotels and guest houses into Class MA Permitted Development Rights, or creating a new Permitted Development Right. Certain safeguards were proposed, such as requiring consideration of the impact on the tourist industry. Whilst this in theory sounds a sensible approach, the success of the scheme will be in the detail, as it could limit opportunities in this sector. Today's announcements did not touch on this new Permitted Development Right, so we await further detail to see if this will be implemented, and the opportunities that would be created from it. 

So what does this mean for me?

If you own a large (up to 3,000sqm) commercial property which has just become vacant, then today's announcement is likely to be good news for you. Whilst we await the detail, and the new rights have not come into play just yet, today's announcement makes it almost certain that these changes will be coming in the future. 

In what is almost guaranteed to be an election year, it also signals that the political desire to promote housing delivery is being ramped up prior to the election. The Labour party have already dismissed today's announcement as old ideas that are unlikely to deliver success. Whilst you might not directly benefit from today's announcement, the topic of housing delivery being debated in the lead up to the election is likely to bring with it further changes and opportunities for property developers - so watch this space.