The creation of the new Class E in 2020 was big news for many property owners and developers, allowing much more flexibility to change between commercial, business and service uses. For those with vacant commercial units, it was perhaps even bigger news when the Government introduced new legislation enabling Class E floorspace to be converted to residential use under permitted development (PD) rights from 01 August 2021.
The controversial new Class MA of the General Permitted Development Order (GDPO) allows the change of use of up to 1,500sqm of Class E floorspace that has been vacant for three months, and has been in Class E use for over two years, to take place under the Prior Approval process. Whilst Prior Approval requires assessment against a limited number of specified matters, it is no doubt a much more ‘light-touch’ process than the full planning permission route, making it a powerful new tool. Unlike the previous Class O office-to-residential PD rights, the new Class MA also applies in conservation areas, which significantly expands its reach, particularly in town centres.
The Government’s hope is that this loosening of legislation will boost housing supply and help revitalise town centres. However, some London Boroughs are not as ready to relinquish control over Class E uses in their town centres and industrial areas as the government would like.
Historically, Local Planning Authorities (LPAs) have been able to regain some control over PD rights by introducing Article 4 Directions to remove their use in specified areas. Article 4 Directions removing PD rights allowing the conversion of office floorspace to residential have proved particularly popular in central London with many such directions currently in place. Transitional arrangements ensure that these existing Article 4 Directions protecting office floorspace will remain in force until 31 July 2022.
The Government has made clear that it does not want the effectiveness of the new Class E to residential PD rights to be undermined by the introduction of a raft of new Article 4 Directions. In an attempt to quell their use, a new paragraph was added to the July 2021 revision of the NPPF requiring Article 4 Directions to be limited to situations where a direction is ‘necessary to avoid wholly unacceptable adverse impacts’ and where it is based on ‘robust evidence, and applies to the smallest geographical area possible’.
Despite the new guidance, a number of London Boroughs are still pressing ahead with new Article 4 Directions and, are doing so, with the backing of the Mayor of London. In July 2021, the Major published strategic evidence to support a ‘co-ordinated approach’ to introducing Article 4’s to help safeguard the Central Activities Zone (CAZ), Northern Isle of Dogs, town centres, industrial areas, and creative production spaces.
To avoid potentially having to pay compensation, LPAs are required to give one year’s notice of an Article 4 Direction coming into place. LPAs therefore effectively have a limited window in which to act before existing Article 4’s expire. So, to date, which London Boroughs are proposing new Class E Article 4 Directions?
The City of London Corporation was quick off the blocks and has already undertaken consultation on the making of an Article 4 Direction to remove PD rights for the change of use of offices (Use Class E(g)(i)) to residential (Use Class C3). The Direction is proposed across the whole of the City area.
Similarly, RBKC is proposing a borough-wide non-immediate Article 4 Direction removing all Class E to residential PD rights despite the Government indicating that Local Authority wide directions are unlikely to be supported. RBKC argue that this blanket cover is appropriate given that it is geographically the smallest borough in London (excluding the City of London) and its offices are not concentrated in specific areas.
Other London LPAs do, however, seem to be taking a more geographically targeted approach to the application of Article 4’s. For example, Westminster has taken the decision to cover a smaller geographic area than the City Council’s existing office-to-residential Article 4 Direction by removing some parts of the CAZ (i.e the Royal Parks and the River Thames) from the proposed direction. Westminster’s direction removes all Class E to residential PD rights in ‘recognition of the positive contribution of all such uses to the role and function of the CAZ’.
Lambeth Council is seeking to introduce three non-immediate Article 4 Directions in specific areas including land within the CAZ (as it relates to Lambeth) and selected town centre locations. Southwark Council has also chosen to focus on specific areas and are proposing a series of immediate and non-immediate Article 4 Directions.
Other Councils proposing Class E Article 4 Directions include Wandsworth, Tower Hamlets, Richmond, Bromleyand Camden. Whilst this list is by no means exhaustive, it does show that many London Boroughs are determined that there will not be a Class E to residential free-for-all. It is also clear that many LPAs are choosing to progress ‘non-immediate’ Article 4 Directions that come into force in August 2022 to avoid the risk of financial compensation. As a result, in some cases, Class E uses other than office floorspace may still be able to benefit from the new PD rights between 1st August 2021 and 1st August 2022, because only existing Article 4’s protecting against the loss of office floorspace are temporarily extended.
In addition to the introduction of Article 4 Directions, we also understand that a legal challenge has recently been made by the London Borough of Islington against the new Class MA PD rights. Islington’s legal challenge is in addition to the challenge by Rights:Community:Action against the new Class E and PD rights to build upwards which, having been dismissed by the High Court last year, is due to be heard by the Court of Appeal on 5th October 2021. We shall be watching both of these challenges with interest as well as whether the Secretary fo State chooses to intervene with the making of any of the proposed Article 4 Directions.
Of course, it is important to remember that, even where PD rights do not apply or have been removed, full planning permission can still be sought for the change of use from Class E uses to residential.
If you have any queries regarding Class E-to-residential PD rights or Class E uses more generally, please feel free to contact a member of the Firstplan team.