Building futures

Explore why our housing shortage needs imaginative solutions.

10 October, 2021

A shortage of housing in the UK is prompting some clever solutions from policy makers. When we think of new homes being built, it usually conjures images of large-scale developments, with row upon row of houses and any number of neat driveways lined up symmetrically. In more urban areas, we might think of expensive executive apartments shiny with glass, chrome and polished stone. But new build housing is facing some issues. In June of this year, Homes England reported that their housing programmes delivered 37,330 new houses starting on-site and 34,995 houses between 1 April 2020 and 31 March 2021. The proportion of affordable homes started and completed was down on the previous year. This was a result of a slowdown in housebuilding activity caused by the Covid-19 pandemic. The pandemic and the political upheaval of Brexit will remain features of the new build landscape. Supplies of materials such as timber, steel, cement and roof tiles have been dwindling for months, while prices have risen.

Imagination and choice are exactly what buyers require, and it’s part of the government’s broader effort to regenerate our high streets. Other recent announcements have also included giving councils new powers to turn derelict buildings into homes in cases where regeneration plans have stalled. The high street needs help and the government is alert to this. The latest addition to ‘permitted development rights’ (PDR) mean anyone can convert commercial, business or service buildings into new residential homes without seeking planning approval from the local council. There are limited circumstances where the council still has to issue permissions, but the new rules, announced in March this year and which took effect on 1 August 2021, mean developers can convert Class E properties – shops, offices, restaurant, cafés, health services, nurseries, gyms and leisure facilities – into flats or houses with far less red tape to negotiate. The Housing Secretary Robert Jenrick made a formal statement earlier this summer, claiming that further relaxing of the rules, which have been around for a while, will “breathe new life into commercial areas and high streets by bringing vacant buildings back into use as new high street homes”.

Councils will retain their right to block developments, but Jenrick has been quite firm that this should be used sparingly, with officials instructed to “look closely at all new Article 4 directions [included in the new rules] to check that they comply with the new policy, and I will consider exercising my power to intervene if they do not”. John East, KFH Land and New Homes Director, has this to say about the changes. “What impact his directive will have on the local authorities, many of which have significant log-jams in their planning processing, is difficult to assess”, he says. “With the last round of PDR, Article 4s were issued by a number of local authorities and expectations are that more will follow where they are endeavouring to protect local employment.

Building futures - Kinleigh, Folkard & Hayward

Aspects of the wider scope for permitted development rights will assist with London’s housing supply, but it is not the sole answer to the problem.

It’s a subject that demands sensitivity: local high streets are the life-blood of communities, with the Post Office, bank branch, local café, butchers and bakery all vital to those living in the locale. “Those that enjoy a local baker or butcher, for example, would be sorry to see them go and probably do everything they could to protect them,” East comments. “Others are already poorly serviced and these communities will therefore be less resistant provided that they have access to a ‘high street brand’ convenience store.” The pandemic and the subsequent lockdowns it necessitated has had a major impact on huge numbers of these small businesses, which has also opened up an opportunity to help address the housing crisis.

The PDR rules may indeed have the potential to encourage local investment and economic prosperity. The alignment of favourable government policy to revitalise town centres, the most recent financial support being the £831m Future High Streets Fund to be shared amongst 72 high streets in England, together with the increased number of residents working from home, could mean we are entering the next cyclical phase for our cities. In all, there is the potential of 16,117 new homes. It’s undeniable that the introduction of permitted development rights in 2015 has led to a significant rise in the number of new homes coming to market, often located in town and city centres, or areas which have been neglected or which have become semi-derelict. According to the Royal Institute of Chartered Surveyors, a total of 72,980 new dwellings were added to the housing stock through PDRs over the five years between 2015-16 and 2019- 20. Of these, 64,798 (89 per cent) were created through office to residential conversions – the largest category by a substantial margin. RICS reported in May 2018 that the quality of office to residential schemes ranged from high to extremely poor, with PDR schemes being “significantly worse” than those which had been through the full planning process.

In response, the government went on to legislate to ensure new homes delivered via permitted development rights provide adequate daylight and meet national space standards. Jenrick said: “Councils should recognise the value to housing supply and increasing resident town centre footfall from supporting flats above shops. For example, councils can consider applying different policies to residential conversions above ground floor level. “This is important to support mixed and flexible high streets, to deliver additional homes more easily, and to support jobs in the construction industry, while increasing demand for local high street services through new high street homes.” There are a few other changes being brought in this October, including the imposition of a maximum 1,500sqm size limit for properties qualifying for conversion under the scheme.

Building futures - Kinleigh, Folkard & Hayward

Developers must also be able to show the building they wish to convert has been vacant for a minimum of three months, excluding vacancies that relate to the suspension of business activities due to Covid. Where health centres and nurseries are candidates for conversion into homes, councils will be on high alert. Taking amenities such as these out of circulation can have a seriously detrimental effect on local infrastructure, particularly when the loss of such services coincides with adding more people to an area for whom these services are also a necessity. A new fee of between £100 and £5,000 per new home created using permitted development rights is also being imposed. How this plays out should become increasingly visible across local and village high streets over the next 12 months.

More established areas may be circumspect about the change this could bring, but first-time buyers are likely to be encouraged. We simply cannot afford to allow the issues facing the housing market to roll on unaddressed and the truth is that we need more ideas that help increase the supply and choice of property. Re-using otherwise unwanted space not only makes sense commercially, it also eases the pressure on green-field sites and helps re-invigorate our city centres. It is a work in progress and there is some political wrangling to be done yet. There may be some finessing of the PDR changes over the coming months, but few are in any doubt about the need for them. As East concludes: “My view is that high streets will need to evolve and that where rents are good value, opportunities may arise for new local businesses that the local community may not have thought they needed, to thrive as part of the new community.”

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