Class MA & Permitted Development Rights – One Year On

Earlier this year we wrote about the (then) new Class MA permitted development (PD) rights and why we in the property consulting world, were so excited about it.

Just to recap, the Class MA PD rights allows for the conversion of buildings in commercial, business and service use (Class E) to self-contained residential use (though not HMO).

As a result of Class MA, the planning opportunity for a significant number of buildings were made more accessible for conversion to residential.

Over a year on, and with more specific experience of Class MA under our belts, this blog aims to establish the importance of Class MA, the common mistakes people make with prior approval, article 4 directions and Class MA then we’ll finish off with some practical tips on looking for or at Class MA opportunities.

So why is it so important to know how to use?

• Class MA establishes the principle change of use – Council’s usually have policies to protect their local economy and normally seek to resist the loss of employment or commercial floor space unless it has been exposed to open and rigorous marketing for up to 2 years in some cases.  Permitted development through Class MA bypasses this as there is no need for such a requirement.  The lack of demand for the employment use in the case of commercial premises under Class MA rights is assumed through demonstrating that the premises have been vacant for 3 months or more.

• It’s quicker. Full planning applications take a long time – whereas its 56 days maximum for Class MA. This gives a quicker exit from the deal, meaning developers are less exposed to build cost inflation because of shorter timescales.

• The cost-of-living crisis and increase in interest rates means there is less household disposable income which in turn is likely to lead to less retail footfall. This is likely to cause particular trading challenges for secondary and tertiary retail pitches. These sites, especially in the case of retail units and some office locations, are expected to experience lower demand than more central locations or prime pitches; they may suffer from a weaker connection to the public transport system, lack prestige or experience poor footfall away from the main shopping streets.  As people experience a squeeze on their disposable income, and due to online retail, some of these more peripheral sites are likely to suffer and will be difficult to relet, thereby opening the opportunity for a change of use to residential.

• Class MA provides more certainty of outcome than a normal planning application – finance will be easier and cheaper to establish.

Common mistakes people make with Prior Approval:

• The need for due diligence and caution is often underestimated. For example, the impact of sunlight and daylight leading to the reduction in the number of units or bedrooms.

• Original consent for commercial property might have conditions that restrict the use and need to be removed before applying for PD, though it’s not always possible to do so. Checking planning conditions to current consent is often overlooked.

• Plans, drawings and supporting statements lack the proper detail needed for example by missing dimensions and other legal requirements.

Article 4 directions and Class MA:

• Councils had to replace ‘old’ A4 directions (Class O offices to residential) with ‘new’ A4 directions by 31/07/22.
• Tougher rules under the National Planning Policy Framework (NPPF) to stop ‘borough wide A4 directions’ (paragraph 53, NPPF):
  • Test of necessity
  • Must be more localised and site specific
• Government is more willing to intervene to stop the abuse of these rules and leverage PD rights to deliver more housing as seen in the Royal Borough of Kensington and Chelsea.

Practical tips on looking for/at Class MA opportunities:

1. ‘For-let’ boards – could be an early sign of possible opportunity; landlords nervous about the current market may be looking for an exit.
2. Avoid rash assumptions about PD potential – get early expert advice; if you want to know the price of good advice, then experience the cost of bad or no advice!
3. Check title restrictions on covenants affecting use and rights of access as well as the prospect of obtaining vacant possession from commercial tenants (e.g. security of tenure rights under the Landlord and Tenant Act 1954 Part II) – talk to a property solicitor if in doubt.
4. Do I need to pay the Community Infrastructure Levey CIL or other financial contributions (e.g., Suitable Alternative Natural Green Space [SANG])? – sometimes these additional charges can make or break the viability of the project.
5. Look at the conditions of Class MA as a way to ‘add value’, not a threat – possible ‘marketing plus’ to good sunlight/daylight & good use of layouts (e.g., ‘home offices’ as a separate room to new flats in some locations will add roughly £15,000 per room or more to GDV.)

With careful planning and attention, and the right team in place positive outcomes are possible as we’ve seen over the last 14 months.

Here’s a useful Class MA Validation Checklist for you to download.

DRK Planning Ltd is a multi-disciplinary planning and development consultancy practice founded by David Kemp. With more than 20 years of experience in planning consultancy. DRK Planning provides a diverse range of expertise, adding value to owners and businesses through a wide range of property services.

If you have an enquiry about Class MA – email info@drkplanning.co.uk we’re happy to discuss your project in an initial brief introductory call.