PDR update: the devil is in the detail

by on for Estates Gazette

In an article late last year (PDR extension brings confusion, EG, 28 November 2015) I noted that, while the government had, with one hand, given developers their much-longed-for gift of an extension of permitted development rights, the detail around the change in legislation was somewhat sketchy. This meant that the May deadline for completion of existing schemes was still relevant and funders remained anxious about lending on schemes where completion of the scheme was unlikely to take place before the expiry of the May deadline. In a number of cases, the availability of insurance was the key to getting these deals over the line.

What’s new?

Under the original legislation, there was a requirement for the “use” of the relevant building to have “begun” before 30 May 2016. This will fall away when The Town and Country Planning (General Permitted Development) (England) (Amendment) Order 2016 comes into force on 6 April 2016. The requirement will be replaced with one for the works to have been “completed” within three years, “starting with the prior approval date”.

A further change is that there will be an extension of the prior approval conditions, to require noise impacts on intended occupants from premises in commercial use to be assessed, ie an assessment of how noise from commercial premises might affect a residential user.

Any less confusion?

One of the major issues with the original legislation is that there was a high degree of uncertainty as to what was meant in relation to the requirement for the use to have begun, and many (sometimes contradictory) counsels’ opinions were obtained on the subject.

One would suggest that the word “complete” in the new legislation should be given its ordinary meaning, ie “complete in all respects”. This may well be something akin to practical completion, another term that isn’t always easy to define and of course there is no definition in the legislation.

Further, while the legislation does not specifically state that it is to apply to existing permitted development schemes, it is difficult to imagine that the legislators intended otherwise. It would be nonsensical for the new legislation simply to apply to post-6 April schemes and so it is likely that existing schemes now have three years to complete, again from the date of the prior approval itself.

There will, inevitably, be some schemes started early on, which are on the borderline of the change in legislation. The old uncertainties remain in relation to those. It could be that the previous uncertainty may be made worse by the new legislation, as there is less ambiguity around the word “complete” than there was around the requirement for use to have commenced.

Insurers still to the rescue

So a scheme where it might previously have been argued that use had commenced because, say, one flat on each floor was ready, may fail on the test of whether the development is complete. Again insurance may be the only option to cover off the risk of enforcement.

And just to state the blindingly obvious, developers and lenders will still need to consider whether a scheme can be brought home within the three year period; not such a long time for larger or phased schemes. I predict the insurers will still be providing the blanket of comfort to funders for some time yet.