Planning matters

On 25^th February 2016 the Use Classes Order (1987) was amended in Wales to introduce a new C4 use class, which has been in place in England since April 2010. Use Class C4 covers the use of a dwelling house by not more than six residents as a House in Multiple Occupation (HMO)[1]. Prior to the introduction of this use class, landlords could convert a standard dwelling to a HMO of up to six people living together as a single household without the need to apply for planning permission. Now, this conversion will constitute a material change of use of the land from use class C3 (Dwelling House) to C4 (HMO) which Councils will be able to assess against their statutory development plan. Meanwhile, converting back to C3 from C4 does not require planning permission as it is considered permitted development.

As a consequence of this amendment, Local Planning Authorities (LPAs) will possibly have more control over the number and location of HMOs within their area. LPAs would most probably argue that this is a positive given that a high concentration of HMOs can create transient communities as well as contribute to parking and waste problems (45% and 51% of students in Cardiff and Swansea respectively live within the private rented sector.) Other issues, perhaps more important, include valuable family housing being lost from the housing stock and converted into HMOs, making it increasingly difficult for first time buyers to access the housing market. It remains to be seen if Councils will refuse planning permission for HMOs going forward and if this will see more HMOs reverting back to family housing[2].

This brings us on to the subject of purpose built student accommodation (PBSA). PBSA has become increasingly popular recently for developers and for students. The benefits for students are clear: often, a better standard of living, on-site facilities as well as increased security and the benefit of not having to deal directly with landlords/agents. PBSA is proving to be a clear attraction for students and its recent proliferation has seen numerous students opting for PBSA in preference to HMOs. This is likely to lead to the traditional inner city homes that have hitherto provided the mainstay of student housing, potentially converting back to family homes, which may be no bad thing.

Understandably, the relatively cheap cost of renting a room within a HMO will still hold some appeal to students outpriced by PBSA which implies that HMOs still have an important part to play in the supply of student accommodation.

However, PBSA is not without its own planning complexities with regards to how schemes are considered by LPAs. Generally, PBSA is classed by LPAs as a Sui Generis use as it does not fall within any specific use class. NLP’s experience is that PBSA is evidently different to conventional residential housing (C3) and is arguably more akin to a hotel (C1) in its operation as it includes management personnel and on site facilities such as laundry, reception and common rooms[3], but the approach of dealing with PBSA applications differs dramatically from one LPA to another.

However, we have also seen instances of LPAs requesting that applications for PBSA specify the use class as C2 (residential institutions), C3 (dwelling houses) or C4 (HMO), depending on the particular circumstances. Some LPAs argue that a PBSA comprising studio flats should be classified as C3 due to the fact that studios include their own kitchen and bathroom. On the other hand, some LPAs argue that PBSA comprising cluster flats of up to 6 people should be classified as C4.

Uncertainty around the specification of a specific use class for PBSA has enormous implications for the sector,  especially if LPAs start requesting affordable housing contributions on PBSA applications that fall within Use Class C (even though the nature of the accommodation is quite clearly different to open market housing). Prominently, this would have an impact upon development viability. For example, Oxford City Council has an adopted policy which states that planning permission will only be granted for new student accommodation that includes 20 or more bedrooms if a financial contribution is secured towards delivering affordable housing elsewhere in Oxford[4]. (With the sum in Oxford amounting to £140 per sq m, a notional PBSA scheme of 5,000 sqm would need to pay £700,000 in financial contributions).

Given the relatively recent boom in PBSA development, the correct approach with regards to the use class of PBSA is yet to be tested in a court of law and therefore the varying approaches of LPAs looks set to continue into the future. However, what is clear in the current market is that PBSA is a form of development that is becoming increasingly popular for students and developers alike and there are implications of this, not only on supply of student accommodation but also on the fabric of some areas with traditionally high concentrations of students. This could lead to a perceptible number reverting to family homes – without the need for planning permission, of course!