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A Retail Revolution For Developers?

Ritchie Clapson, a qualified structural engineer by profession, is co-founder of the property development training company, propertyCEO and comments on how the High Street could see the next big opportunity for small-scale property developers

Converting non-residential property into residential homes will always have quite a few positives if you’re a developer. You’re not going into the ground for a start, a place where all manner of horrors might lurk. Plus you’ve already got a building, so you don’t need to demolish it and start again, and that means that timescales are usually quicker and the costs lower. It’s also somewhat kinder to the planet since we’re essentially recycling buildings.

Back in 2015, the government updated the planning regulations to allow commercial buildings to be converted to residential use without a full planning application, using Permitted Development rights (PDR).PDR provides for the change of use class of a building without the need to go through the full planning approval process, which can often be notoriously slow, contentious, and cumbersome. Since then, many developers have successfully capitalised on this, creating many new residential conversion projects nationwide.

Most conversions to residential use fall under a PD category called Prior Approval. Here developers must obtain Local Planning Authority (LPA) approval; however, this is usually straightforward and takes 56 days maximum. So in planning terms, Prior Approval is quick and carries less risk. PD also has the benefit that developers can bypass national ‘space standards’, enabling them to create smaller, more affordable units. Whereas space standards dictate that a new-build flat for one-person must be at least 37m2, under PD there is no such minimum. However, since high street mortgage providers won’t generally lend against sub-30m2 properties, plus people don’t want to live in ‘rabbit hutches’, it makes sense to use 30m2 as a minimum size.

This ability to dodge space standards has attracted political criticism, as some rogue operators went on to create cramped, low-quality housing. However, anyone who’s visited a well-designed 30m2 1-bed flat will tell you that they’re nothing like ‘rabbit hutches’. And of course, these lower-cost units also allow more people to get onto the housing ladder. Those that call for a permitted development ban need to recognise that it’s not PD itself that’s the problem; it’s actually a useful tool for creating desperately needed new homes using our existing building stock. It would be like banning motor cars to stop dangerous driving; the right intention but the wrong solution.
However, commercial conversions are not the only game in town when it comes to Permitted Development. Many different building types can be converted without going through the formal planning process, and one PDR opportunity that is frequently overlooked by developers is retail.

So, what’s so exciting about shops? Well, let’s start by looking at what they offer on the planning front. Shops currently have two types of PD rights under the Town and Country Planning General Permitted Development Order 2015 as amended (GPDO). Here is a high-level overview of each (please check the GPDO wording for all the gory details):

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