London planning news, August 2021

The Mayor has published strategic evidence, aimed at supporting local planning authorities in London introduce Article 4 Directions, to restrict changes of use from various commercial, business and services uses to residential, under the recently introduced Class MA permitted development (PD) right.

The new Class MA PD right came into force on 1 August 2021, replacing the former Class O (office to residential), and partially replaces Class M (retail to residential) PD rights.

Given the difference in land values between residential compared to business and commercial uses, the Mayor has highlighted the risk that the Class E to residential PD right will incentivise a significant loss of commercial and certain industrial uses to residential in areas of strategic importance for London. The key areas identified as being at risk are:

• London’s Central Activities Zone (CAZ) and the Northern Isle of Dogs (NIOD);
• Strategic significant office locations beyond the CAZ and NIOD;
• High Streets and Town Centres; and
• Industrial areas and creative production space (including Strategic Industrial Locations (SIL) and Locally Significant Industrial Sites (LSIS), and CEZ).

The report states that given their complex and strategic nature of these locations, these will often benefit from “different or tailored approaches to the application of national policy”. As such, Article 4 Directions may help protect the vitality and vibrancy of these areas, while also optimising capacity of sites in a plan-led way. The report states that the CAZ and NIOD rely upon a carefully balanced mix of commercial, cultural and residential uses, dependent on careful land use management, supported by site allocations, area action plans, and town-centre strategies.

Beyond these locations, strategic office locations in areas such as the Tech City area and Kensington and Chelsea are also recognised as sources of employment and economic activity in need of a coordinated approach. The Mayor argues that decisions made with regard to development plan policies will be able to ensure that the capacity of sites is optimised to deliver outcomes for housing delivery, housing quality, as well as place-making. 

At present, existing Article 4 Directions remain in place for office to residential conversions (under the now retired Class O PD right) for many of these locations, with transitional arrangements allowing for these to continue to have effect until 1 September 2022. This will give councils some time to introduce future protections relevant against office to residential conversions, though these existing directions will not affect changes from other such as retail and leisure, where these meet the requirements and conditions under Class MA of the Order.

The report also highlights the risk of losing additional light-industrial and creative-production spaces, where these now fall within Class E as a result of last year’s changes to the Use Classes Order. It also risks that the future effectiveness of these locations through the creep of neighbouring residential uses, which may threaten the future ability for some sites to operate on a 24-hour . Class MA does already allow for local planning authorities to consider the impacts of noise from surrounding commercial uses on the future occupiers of homes as a matter for prior approval, as well as the impact that the introduction of residential uses may have on areas important for industry, storage and distribution and waste management.

It is noted in the guidance that conversions via PD may also impede on plan-led approaches to industrial intensification and co-location supported by the London Plan; as well as making it difficult to ensure there is sufficient capacity for industry and logistics servicing the CAZ and NIOD. Emerging estimates suggest that vacancy rates for industrial land are significantly lower than found by the 2015 industrial land baseline study, it is expected that there will be a positive net-demand for industrial land in London over the period 2016 to 2041.

To support the uptake of the new PD right the Government recently introduced amendments to the NPPF, which effectively tightened the criteria for authorities seeking to introduce Article 4 controls. Where directions remove national permitted development rights (PDR) for new homes, the NPPF requires these are “based on robust evidence”, apply to the smallest geographical area possible, while limited to situations where necessary to avoid “wholly unacceptable adverse impacts”.

Despite a seemingly more restrictive position from Government, an increasing number of boroughs have already reacted, and are beginning to introduce; Article 4 Directions to restrict change of use to residential. Southwark Council has introduced an immediate Article 4 Direction blocking changes of use from Class MA for all land within the CAZ, as well as across the Old Kent Road Opportunity Area. The Direction will also apply to the majority of the borough’s network of town centres and high streets, including Major, District and Local Centres. The Royal Borough of Kensington & Chelsea has also made a non-immediate Article 4 Direction for the whole of the borough, which is expected to come into effect in summer 2022, subject to the consideration of consultation responses.

 

The Greater London Authority has published a practice note outlining the various considerations which decision makers should give to First Homes when determining planning applications. First Homes are a new form of affordable housing, comprising discounted market sale homes, sold at a discount of at least 30% of market value.

The note from the GLA reminds decision makers that the London Plan forms part of the statutory Development Plan for decision making in London; while the First Homes requirement is a material consideration for decision makers to take into account alongside policies of the Development Plan.

Currently, the transitional arrangements set out in the Christopher Pincher’s Written Statement in May 2021 mean that the inclusion of First Homes in planning applicationsis not mandatory until after 28 March 2022. For development plans, the Written Ministerial Statement says:

At least for now, it appears the Mayor will continue to favour the provision of other tenures of affordable housing, such as social and London Living Rent. The note from the GLA states, “in many cases, properties discounted by 30 per cent from market value are likely to exceed the £420,000 cap”.

“Where the value is below the cap, homes are likely to be smaller or in lower value areas, and accessible to a limited proportion of households at the upper end of the eligible income range. In many cases a discount to market value in excess of 30 per cent would be required to ensure that the cap was not exceeded. This would have a detrimental impact on development viability and the provision of other affordable tenures, particularly social rent and London Affordable Rent for which there is greatest need.

The note advises that where giving weight to other relevant Development Plan policies, First Homes and other material considerations, the decision makers should have regard to:

• “Affordable housing needs at a local and strategic level;
  
  
• The delivery of affordable housing by tenure against local and strategic targets;
  
  
• The deliverability and affordability of First Homes in a local and strategic context;
  
  
• The discount to market value required to enable First Homes to be provided at or below the £420,000 cap and the relevance of this to scheme deliverability and the provision of other affordable housing tenures; and
  
  
• All other relevant national and Mayoral requirements, including eligibility criteria, for First Homes and intermediate housing.”

Given that the London Plan calls for 47 per cent of new homes need to be provided for low-cost rent and 18 per cent as intermediate products, the First Homes policy may hinder his commitment to boosting the provision of low-cost rented housing in the capital. While future borough plans are expected to be in “general conformity” with the London Plan, national policy on First Homes will be a material consideration that local planning authorities and Inspectors will be required to take into account when drafting policies on affordable housing.

The Mayor has announced a further round of investment for his Creative Enterprise Zones (CEZ) programme.  The programme seeks to provide additional affordable workspace across the capital, while also supporting with training and business support for small businesses and local communities. The funding will support existing CEZs, as well as help introduce a further six zones across the capital, as well over the next two years.

Previous funding has supported a range of schemes across London, in areas undergoing rapid change where development pressure has impacted on the provision of workspace for certain sectors and industries.

In Lambeth, a borough wide Affordable Workspace Policy was introduced in 2020, which seeks to support long-term creation of supportive workspace which takes into account the provision of creative workspace in planning processes. Funding for the Hackney Wick & Fish Island CEZ, established a Creative Development Trust, which seeks to bring together local businesses and residents, landlords, public authorities and developers to manage existing spaces, while ensuring new development supports the delivery of new creative workspaces and venues.