New Permitted Development Rights – an Opportunity for Landlords?

From 1 August, new a new Permitted Development Rights (PDR) scheme came into force, making it easier to convert commercial premises on England’s high streets into affordable residential accommodation. The scheme will streamline the planning process courtesy of a more simplified ‘prior approval’ process, rather than a full planning application. The new rules will open up opportunities for buy to let landlords in converting commercial properties into residential homes, as well as making it easier for them to add space and value to existing properties.

Britain’s high streets have been one of the biggest financial victims of the COVID-19 pandemic, with many iconic businesses having shut their doors for good due to drops in sales and a major move to online shopping.

In response to this, the government launched Project Speed, a new strategy designed to kick-start economic recovery across the country. One of the most significant areas of the strategy was the introduction of a number of new property use classes and, from August 1 2021, a new Permitted Development Right came into force, allowing shops and other types of commercial, business and service outlet (Use Class E) to convert into residential property (Use Class C3) without planning permission, providing certain conditions are met.

What conditions must be met to convert commercial property into residential accommodation under the new PDR?

For a commercial property to qualify for conversion to residential under the new PDR scheme, it must have stood vacant for at least three months before the application is made. The use of the building must have also dropped in more than one class for at least two years.

In addition, consideration will be given by the local authority to safety measures, such as flooding and contamination risks, as well as local impact factors such as disruption and right to light. The floor space must not exceed 1500 square metres, and any land under an agricultural tenancy will require consent from both the landlord and tenant before conversion can take place.

What is the opportunity for buy to let landlords?

The government is encouraging conversions of commercial buildings which are no longer in use, with its easier process of changing derelict buildings in town centres into affordable homes.

With city centres having always been a lucrative place in which to invest, often showing excellent capital growth and a climb in property prices over time, this could well prove a fruitful opportunity for buy to let landlords to purchase a rundown commercial property at a keen price, convert it to residential use, and reap the rewards of a healthy yield over time.

What’s more, existing commercial landlords with empty office space or other types of commercial premises on their hands can quickly convert them to residential use with ease, resolving the issue of unfilled tenancies and leading to a more regular and reliable income. With demand for residential rental property outstripping supply, switching to residential use has to be a good move.

The opportunity for investors to build upon and add value to existing stock by adding more storeys to flats or houses, or adding living accommodation over existing commercial property, all without the need for a lengthy planning application, is also an exciting one for the buy to let landlord.

New Permitted Development Rights: Time to Invest?

If you are considering investing in property now that the new Permitted Development Rights have opened up the buy to let playing field to a much wider audience, why not think about protecting your investment with a guaranteed rent scheme from homes2let?

At homes2let, we offer a full residential property management service with the added benefit of a guaranteed rent scheme. The scheme aims to return you a greater yield, whilst lowering your investment risk by guaranteeing your monthly rental payments, even during void periods.

Why not contact homes2let to learn more? Our expert team has specific expertise in the south London property investment market, and is ready to share extensive knowledge to help you get the most out of your buy to let venture. Please feel free to get in touch today.