Assessing the case for removing light industrial to residential permitted development rights
The temporary permitted development right (PDR) for change of use from Use Class B1(c) light industrial to C3 residential came into force on 1 October 2017. This means that light industrial premises which have a floor area of less than 500 sqm can now be converted to residential use under the prior approval process, rather than requiring an application for planning permission. The temporary PDR is in force until 1 October 2020 (though any changes of use permitted during this period are permanent). The process is subject to various limitations and conditions, which are covered in an earlier blog by my colleague Owain Nedin.
The new PDR represents another of the Government’s wide-ranging measures aimed at boosting housing supply across the country. However, the PDR raises some potential issues for the future economic vitality of local areas that local planning authorities may need to consider. These include:
permanent loss of business space, particularly of smaller industrial and workshop premises which can play an important role in the local economy;
limiting the ability of local areas to plan effectively for business needs, employment and growth; and
creating potential uncertainty for businesses and reduced scope for land use planning and place making for the local planning authority.
Local planning authorities have the ability to remove PDRs by introducing what is known as an ‘Article 4 Direction’. This allows authorities to require change of use applications, meaning they can refer to the development plan and weigh material considerations into the balance in the process of making a decision. An Article 4 Direction requires a clear justification and a defined boundary for the proposed exemption area. Local authorities must therefore compile the necessary evidence to meet these requirements.
There are two main types of Article 4 Direction: immediate and non-immediate. An immediate Direction removes a PDR with immediate effect, but must be confirmed by the local planning authority following local consultation within six months, or else the Direction will lapse. A non-immediate Direction comes into force after a period of 12 months and the PDR is removed upon confirmation of the Direction by the local planning authority following local consultation.
Lichfields has developed a staged analytical framework to support local authorities in making a robust case for implementing a non-immediate Article 4 Direction. The framework draws on a range of economic data sources, local commercial property market signals and the existing planning policy position. It enables local authorities to scope, evidence and prepare the case for an Article 4 Direction, by identifying and quantifying light industrial stock that qualifies for the PDR and the wider significance of this space within a local area in terms of business activity and economic value. In turn, this can allow an appropriate exemption area to be defined and taken forward through the due process as the basis for making a Direction.
Lichfields recently prepared such an analysis (also including offices which are subject to similar PDRs) for the town of Newhaven on behalf of Lewes District Council. Newhaven was one of 18 locations that were awarded Enterprise Zone status in 2015. As part of the analysis, Lichfields quantified the number of eligible light industrial premises in the town and the proportion that fall within the Enterprise Zone area.
Light industrial floorspace clustering example output.
The analysis shows that Newhaven is an important location for light industrial activities in Lewes District, containing around a quarter of the local authority’s total stock of light industrial space. Furthermore, the vast majority of light industrial premises that are eligible for the PDR are within the Enterprise Zone, which has been designed to help stimulate the growth of the local economy.
The quantitative analysis was coupled with site assessments to identify the function of different employment clusters in the town. The analysis concluded that the Enterprise Zone supports considerable light industrial activity, which is likely to develop further given that priority sectors for the Enterprise Zone include environmental technologies and healthcare and biologics.
Lewes District Council’s Planning Applications Committee reviewed Lichfields’ analysis and found that it provided “clear evidence to support the implementation of Article 4 directions in Newhaven to protect office and light industrial use”. The Committee resolved to approve the Directions in October 2017 and these are likely to come into force later this year. They will serve to protect employment floorspace in Newhaven, thereby supporting the expansion of innovative, high value growth sectors in the Enterprise Zone.
The new PDR has potential implications for industrial locations across the UK. The recently published Draft London Plan encourages London Boroughs to introduce Article 4 Directions where appropriate to ensure they can retain sufficient industrial and logistics capacity. As identified in Lichfields’ London Plan Insight, the vast majority of Boroughs are expected to retain or increase their existing industrial capacity. The implementation of Article 4 Directions will be vital to support the economic function of industrial clusters across the capital to help meet the ambitious targets for economic growth set out in the London Plan.
Lichfields’ Article 4 Direction framework brings together robust analysis of local property markets and economic indicators which can help local authorities identify and prepare the case for making a Direction. For further information, please see our information flyer or get in touch.
04 Dec 2017
This blog forms the second in a series on the implications of the Cardiff Capital Region City Deal on planning for housing in South East Wales. It expands upon some of the issues considered in our Insight Focus, Cardiff Capital Region: Planning for Growth.
The Cardiff Capital Region (CCR) City Deal aims to increase skills and improve employment opportunities, against a backdrop of a recognised skills shortage across the region. The City Deal Regional Cabinet has already agreed to invest £37.9 million in the development of a compound semiconductor industry cluster in Newport, which is expected to create 2,000 highly-skilled jobs. Hence, there is a need to support the development of a better-skilled workforce in order to anchor the benefits of new job opportunities within the region and help ensure the City Deal momentum continues.
Alongside direct efforts to upskill the local workforce, there is a need to think more broadly about how to address the issue of retention of local residents as they progress through their careers and of attracting people with the right skills from elsewhere. This wider strategy should include a focus on housing – not only providing the required number of homes but also the right type of homes and in the right locations in order to strengthen the region’s offer to the ambitious and highly skilled.
For younger workers and recent graduates, there is a need to provide good quality private rented homes and smaller homes for purchase. This could help to address the issue of low graduate retention, which was recognised by the CCR’s Growth and Competitiveness Commission (2016) as a particular problem for the region, despite its internationally competitive higher education institutions and further education colleges. For more experienced professionals, it is important to provide larger “aspirational” homes in family-friendly neighbourhoods. This will be necessary in order to reduce the likelihood that upwardly mobile residents will leave the area at the point when they can afford a better home or are looking for a suitable community in which to raise children, and to support the inward migration of such new workers.
According to research conducted by Centre for Cities, proximity to the workplace is one of the main considerations in choosing where to live for young people in particular. Jobs in high tech industries tend to be clustered around specific locations (the compound semiconductor industry cluster, for example), in contrast to the service industries, where employment is more dispersed. The Growth and Competitiveness Commission Report recommends that the CCR complement its economic strategy by way of a spatial development perspective which recognises the roles of different locations, including Cardiff and Newport as established commercial hubs, Cardiff Airport with its associated Enterprise Zones, and towns such as Bridgend, Barry, Caerphilly and Pontypridd that are “in transition to accommodating high value added activity”. Whilst it is not always possible to build new homes in close proximity to high tech sectors, there is an opportunity to consider how to link new housing to these high tech industry locations by sustainable travel modes.
The South Wales Metro project offers a powerful opportunity to open up access to key employment hubs. In addition to increasing the frequency of existing rail services, the Metro project is intended to provide new services, routes and stations and has the potential to decrease travel times on existing routes by more than 20% (see figure 1 and 2), according to Welsh Government’s South Wales Metro brochure (2015).
Figure 1 Current train journey times to Cardiff
Source: Lichfields analysis of National Rail data and Welsh Government “Rolling Out Our Metro” brochure
Figure 2 Potential future train journey times to Cardiff following the completion of the South Wales Metro
Source: Lichfields analysis of National Rail data and Welsh Government “Rolling Out Our Metro” brochure
The completion of the South Wales Metro would bring all of the existing stations in the CCR within a 50-minute train journey time of Cardiff, compared to a current maximum journey time of an hour. Following the completion of the Metro, a train journey of 30 minutes from Cardiff could take you as far as Caldicot to the east, Bargoed and Abercynon to the north and Sarn to the west. Journeys to the other key employment hubs in the CCR would also be significantly improved.
By comparison, in 2015 the average door-to-door commute for UK workers was 28.5 minutes (one-way), while the average journey for those travelling by train was substantially longer, at 65.2 minutes. The proposed reductions in journey times within the CCR would therefore bring a vast area of the region within reasonable commuting distances of key employment areas.
However, it cannot be assumed that buyer demand for homes will immediately increase in the areas furthest away from the key employment centres in the CCR. Even after demand begins to increase, it will take time for land values to rise sufficiently to provide developers (and, more importantly, their funders) with the confidence to invest in areas that are currently less attractive. When planning for housing across the region, it is therefore important to be realistic about the areas that will be viable for development. New planning policy, whether it takes the form of Local Development Plans or a Strategic Development Plan for the region, should take account of the need to support housing growth and not to stifle development opportunities that could help to kick-start the transformation of the region.
Over time, it is hoped that the continued growth of the parts of the CCR that are already vibrant will spread to every community. New housing can provide a catalyst for this growth by bringing new residents, attracting additional spending in local businesses and enabling new businesses to be set up. However, in order to be successful, there must be an appropriate mix of housing in locations that match the needs and aspirations of skilled workers in particular.
 Learning, Skills and Innovation Partnership South East Wales Employment and Skills Plan (2016)
 Growth and Competitiveness Commission Report (November 2016)
 Centre for Cities (November 2015), “Urban Demographics – why people live where they do”
 2015 ONS Labour Force Survey data published by the Trades Union Congress.