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Is This a Commercial Property Game Changer?

Suzi Carter, a Chartered Surveyor with 25 years’ experience in the commercial and residential property sectors, comments

The new Class MA will allow the conversion of many Class E properties without any (or limited in conservation areas) considerations of the effect on the High Street and will be a game changer for many town centres, and likely to be a fruitful strategy for many SME investors and developers.

Of course, these measures come as a package and are hot on the heels of the Government’s other recent permitted development changes – including the amendments to the rights to develop out airspace above both residential and commercial premises, and the changes to Class E itself.

Amongst other things, this new PD right, Class MA, will increase the amount of retail able to be converted to residential. Currently the maximum permitted floor space able to be converted under permitted development is 150sqm. This increases to 1,500sqm under Class MA. There are several prior approval matters that have to be taken care of first of course including, amongst others, minimum room sizes, natural light to habitable rooms, noise, and a vacant property having to be marketed for three months or more – which frankly isn’t much time at all in the context of the current market. The building must also have been in Use Class E (or one of its preceding use classes) for at least two years, which is assessed on a rolling basis.  

Class M (conversion of up to 150sqm of ground floor retail, takeaway, financial or professional services etc. to residential) and Class O (offices to residential) will fall away on 31 July 2020 and be replaced by Class MA, and it comes with one important difference to previous permitted development rights of this nature – the conversion is to be for C3 residential only – HMO’s are not permitted.

Its introduction should mean that it will become much easier to introduce housing into some town centres and should bring back some redundant buildings into use. As investors, there could be some interesting opportunities to explore to purchase unloved buildings, especially before the market starts to price this in.

Although there are a number of conditions for investors to satisfy with regards to the prior approval process for the PD of these sites, local authorities appear to be questioning whether this will actually significantly reduce the potential ‘harm’ caused by the new right by changing the nature of high streets. As a contrary view, however, some industry bodies, consultants and lawyers suggest the changes could actually curtail developer interest as being too restrictive.

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