The biggest opportunity for small to medium property developers for a generation?


Mike Underwood Adsum

Changes are on the way. Changes that have been designed to try and re-energise our town centres, bring people back into the empty streets, utilise unused shops and provide housing for more desperate buyers.

Are all changes good? – I’m not so sure. Is this a huge opportunity for small to medium developers? – it might well be…..

As you may well be aware on the 1st of August 2021 a powerful new change is happening to the classification system of commercial properties, moving from Class E to Class MA. MA stands for Mercantile to Abode, literally shop to home.

This means that property developers can take advantage of this classification and develop under permitted development rights without the need for a full planning process.

PD rights has been a success; The permitted development right that enabled the conversion of offices to residential (Class O) has been well utilised by developers across England since 2013 with over 13,000 prior approval applications approved in that time with the various PD routes resulting in the delivery of over 72,000 new homes between 2015 and 2020.

I personally have seen some great projects undertaken through this route.

However, the new class MA will be a different beast to the current retail and office to residential PDRs, with several different limitations and conditions.

This shows that the new, broad, permitted development right will actually reduce the scope of office to residential permitted development while increasing the scope of retail to residential PDRs and introducing new PDRs for other typically main town centre uses to change to residential.

The permitted development right does not apply if more 1,500sqm of cumulative floor space is to be converted.

This is significantly more than the 150sqm permitted under Class M retail to residential at present, but a significant new restriction for office to residential change of use via permitted development.

In essence, the Government has reined back the proposals consulted on by adding floorspace limitations, vacancy and location limitations, having reflected on the consultation responses it received.

Notwithstanding, Class MA, which will allow very many properties within Class E to change to residential without consideration of impact on the High Street if the proposal is outside of a conservation area and limited consideration if it is within, will be among the most significant planning changes in a generation.

Only listed buildings and their curtilage and properties in the most sensitive locations such as World Heritage Sites, National Parks and Areas of Outstanding National Beauty will be excluded from the new PD right.

Delivering housing and the reuse of redundant shopping space are known to be the Government’s priority and the Class MA permitted development right emphasises this.

So now might well be the time to secure that great located empty retail unit and book your finance in early! And of course, if the commercial unit is opted to tax, Adsum is the only VAT lender you will need.

Adsum recommends that you take professional advice on all planning, legal and financial matters.