Could The John Lewis Partnership be joining the Class MA PD rights gold rush? ...
The past 12 months have seen significant changes to Permitted Development (PD) rights, from the weakening of Article 4, to the introduction of Class MA and the new Use Class E.
But you can’t go hunting for properties to develop just yet.
Without a clear checklist on which sites actually meet the permitted development criteria, you can’t be absolutely certain you will be able to get the end values you want. Or make a profitable investment.
With this in mind, we’ve pulled together a list of the top nine permitted development strategies.
This article will arm you with strategic ideas to uplift the value of even more property types through commercial to residential conversions, discuss some common PD pitfalls you should avoid, and detail how you can find the right PD sites.
📕If you'd like to understand more about what permitted development rights are, you can read more here: A guide to permitted development rights.
Permitted development: The 9 best strategies for commercial conversions
If you’re looking for more commercial conversion opportunities, here’s our round-up of the nine best strategies to consider:
1. Targeting Class E buildings
Firstly, we recommend considering ‘Class E’ buildings. Here you can take any building in commercial use case Class E (within the last two years) and either fully or partially convert it to residential use. Essentially, this works like a ‘rolling timestamp’ - with the building needing to have been in commercial use for the previous two years.
It was not uncommon for these ‘Class E’ buildings to be built to a lower standard than newer buildings and so they are often cheaper to convert from commercial to residential. Therefore, they provide a great opportunity for residential developers to make a profit from their conversion.
2. Converting basements to residential
The next strategy that's worth exploring are basements. Previously, there was no provision to convert commercial basements at all.
There are a couple of building regulations in place to keep the space suitable for residential occupation though. For instance, it must have natural lighting and be greater than the minimum space requirement of 37 square metres.
3. Creating more than two flats above a shop
A change in legislation means you can now create as many flats above a shop as you like - subject to minimum space standards of 37 square meters per unit, and every unit needs to have natural light.
Under the old rules, no matter how many floors you had above a shop, you could only create two flats. For instance, if you had two floors above a shop, you could create two flats, and if you had 10 floors above a shop, you could still only convert them into two flats.
With this little-known insight, you can now see more potential in a property. This helps you to value the property more strategically, win more properties and get the outcomes you need.
4. Converting restaurants to residential
Restaurants previously classed as use Class A3 are now classed as use Class E and can now be converted to residential under Class MA - provided they meet the requirements.
One thing to note is that any conversions under Class MA must be for residential use only and cannot be converted into an HMO, for example.
5. Converting ground floor retail to residential
Perhaps even more interesting, you can now actually convert the whole of a ground floor retail space to residential - as long as it’s not in a conservation area.
Often these properties were residential at some point, and all you’re doing is changing it back to residential again. These sorts of properties can be easier than you think to restore back to residential use due to their existing infrastructure and layout. As they were originally designed for residential use when they were first built, it’s fairly simple to restore the harmony of the space back to its original state.
6. Converting GPs, dentists, surgeries, and nurseries to residential
GP surgeries, dental surgeries, and nurseries can now be converted to residential under the new permitted development rules.
Like with the ground floor retail properties, many of these types of businesses went through a period where they were actually in the form of residential accommodation.
This often involves converting a previously residential property (that’s now commercial) back to a residential property again. This means they can often be relatively easy to convert back due to their original residential infrastructure and layout.
7. Scrapping of ‘Article 4’ conversion opportunities
So few people still know about this, but Article 4 has now been scrapped. This means you can now build flats at the back of shops where it’s in a conservation area.
While the front of the shop must still be in commercial use, you can convert the back - subject to natural light and minimum space requirements.
8. Converting mixed-use offices to residential
Previously, if an office building had mixed usage - for example, one floor was a gym, and the rest were offices - you couldn’t get permitted development rights. Now, however, they fall under Class E mixed usage and can be converted.
9. Building two flats above Sui Generis properties
The final Permitted Development we want to touch on is Sui Generis properties - such as casinos, betting shops, payday loan shops, and hot food takeaways. While they don’t fall into usage Class E, you now have the right to build two flats above these.
A significant benefit with these types of properties is that you can generate cash flow from renting out the shop below while you await your planning permission to come through.
Common Permitted Development pitfalls to avoid
While the above present exciting new opportunities, there are some key considerations to be aware of:
You need to check whether each site has the right characteristics, i.e. that it's the right size, in the right use, and not in "article 2.3 land". This means it's not listed or in the green belt.
It’s also key that the scheme works financially and it’s likely that conversion will make at least a 25% return on cost.
The building must be vacant for a period of three months prior to the application for Prior Approval. This means you can’t apply if tenants are occupying the property.
As with many other Prior Approvals, there is a rolling two-year period date stamp - it must have been one of the uses mentioned above or use Class E for at least two years.
If there is additional planning required, for example, additional windows or doors or anything external, you will probably need to submit an additional planning application.
You’ll need to make sure there aren’t any challenges such as flooding risks.
Finally, be sure you are working with a team of planners and designers who have worked on similar conversions/developments to benefit from their experience.
As an interesting side note, most Permitted Development will still be subject to some restrictions and these should be verified with your local authority. You can check for those on the Government website here.
Finding the right Permitted Development sites
You’re probably already considering your next sites and looking for the most profitable purchases.
But with that comes hours manually trawling through data or using tools with incomplete information to try and find the exact information you need.
This is where a solution like Nimbus Maps comes in.
Our commercial conversion package includes four exclusive overlays highlighting commercial conversion opportunities. For example, it identifies Class E commercial properties that meet the criteria for conversion to residential under new Class MA PD rights.
It works by cross-referencing a number of datasets, including use class, planning constraints, and square-foot measurements to identify sites that meet pre-defined criteria. This significantly increases the number of PD commercial conversion opportunities you can take advantage of.
Why not see our unrivalled property data and intelligence platform for yourself, watch a demo.