Are Permitted Development Rights fuelling the increase in micro housing?
Richard Payne (pictured), director of development at Oblix Capital.
The UK is experiencing a chronic housing shortage. Earlier this year, housing charity Shelter reported that 1.2 million new homes are needed to ensure there is enough permanent accommodation for younger families – many of whom live in rented homes because they cannot afford to buy.
Permitted Development Rights
Permitted Development Rights (PDRs) were introduced in April 2015 as a measure to try to help ease the housing shortage and improve housing. They allow developers to convert a commercial unit into residential accommodation, and homeowners to extend their homes without having to apply for planning permission, provided that the changes comply with the PDR rules.
Minimum space standards
In October 2015, the government introduced a new minimum ‘space standard’ for housing. The government recommends that no new dwelling should have a floor area smaller than 37 square metres if it is occupied by one person; recommended minimum floor areas then increase in line with the number of bedrooms and occupants in a dwelling.
Unfortunately, many flats do not meet this minimum criterion (although it should be stressed that this is not exclusive to flats created under PDR). Research published by the Royal Institution of Chartered Surveyors (RICS) in 2018 noted that there were some extremely high-quality conversions delivered through PDR, but it also found that fewer than a third (30%) of housing units created through PDRs complied with the minimum space standards recommended by the government.
One example of unsuitable development is where a former commercial building in north London is to be converted into 15 flats. If building proceeds as expected, each self-contained flat or studio will be between 16.5 and 22 square metres in size – which means that some dwellings could be less than half the minimum size recommended by the government. In addition to the restricted size, seven of the proposed units will also not have any windows, and the upper floor units will have no access to a fire escape.
The future of PDR
There is strong cross-party agreement about the need to improve the provision and standard of housing in the UK. However, PDR is an increasingly divisive issue, with a number of high-profile objections to their continuing use. According to the Association of Public Service Excellence, about half of councils believe PDR could be a threat to people’s health; the Local Government Association (LGA) has also warned that PDRs led to a loss of more than 10,000 affordable homes between 2015 and 2018. The LGA argues that these homes are delivered without having to contribute towards affordable housing, or going through the planning system. In addition, the Labour Party has said it would abolish PDR if it were in government, arguing that it had allowed developers to ‘bypass normal planning processes’ by not having to get consent from councils and local communities.
Meanwhile, there is support for PDRs from others industry bodies. Brian Berry, the chief executive of the Federation of Master Builders says that abandoning PDR for housing conversions would put more pressure on planning departments, delay the planning process and reduce the availability of new housing.
Responsible specialist lenders can play a part in helping to ensure that new housing stock meets minimum acceptable standards.
As well as assessing the size and standard of the accommodation that is to be built, lenders should also consider the quality of living that will be provided for the occupants, the location of the development, and the developer’s exit options.
If the plan is to sell the units then restrictive sizing, flats with no windows, or office conversions in the middle of an otherwise industrial area may make it difficult for buyers to get a mortgage. Whether such units are to be sold or rented out, they are unlikely to provide a good quality of living, and could even contribute towards the growth of slum housing in the UK.