We recently took a look at the world of open storage and how developing land for this purpose was becoming an increasingly interesting proposition for developers.
Staying in the same vein, this month we thought we’d take a look at another development option which is growing in popularity with developers and investors across the country.

Let’s talk about permitted developments.

What are permitted development rights?

Put simply, permitted development rights (PDR) enable property owners to convert or extend buildings without the need for full planning approval. There are specific parameters they have to work within but nonetheless, permitted developments are a valuable tool that can enable better developments and a wider diversity of potential homes.

The concept is seeing renewed attention at the moment because the government has recently broadened permitted development rights, introducing a new Use Class MA, which allows for the conversion of commercial, business, and service premises into residential units.

These sweeping changes aim to accelerate the repurposing of dormant, underutilised spaces, particularly where office and retail spaces have seen a big fall in demand.
The massive upside of this is that developers can find new opportunities to convert smaller office spaces, high street properties, and other commercial units into residential flats, often within just 56 days from application to approval.

The rise of permitted developments

The growing relevance of PDR is driven by the need for speed and efficiency. Planning applications for traditional developments can take months or even years. It was one of the many challenges we spoke about recently at our round table on SME developers. Councils are often missing their own targets on processing times and this is leaving too many developments stuck in the mud and bleeding resources.

Permitted developments require only a prior approval application which councils must review within 56 days, removing a huge roadblock that many developers fear when approaching a new project.

As we’ve already touched on, there’s another huge benefit of permitted developments. With the expanded scope of PDR such as Use Class MA, we can start breathing new life into high streets and defunct retail districts, converting them into valuable homes that people are crying out for.

Economic benefits of permitted developments

The benefits of permitted developments don’t stop there. There are many good financial reasons they’re a viable strategy.

·       Lower initial costs: The reduced planning requirements mean lower upfront costs. Developers can avoid extensive architectural and structural surveys, which are often necessary for full planning applications. This cost-saving is especially beneficial for smaller developments, such as converting high street offices or properties above shops.


·       Maintaining commercial revenue streams: When developers work on properties with mixed uses—like converting office spaces above retail units—they can often carry out conversions without affecting the income generated by the commercial tenants below. This means that while residential units are being developed, the property continues to generate revenue, making it a win-win.

The challenges

So what’s the catch? While permitted developments are a great option and viable for many sites across the country, some considerations need to be taken on board.

·       Compliance with light and noise standards: As a developer, you’ll need to make sure each unit meets the minimum space and light standards. This might make certain sites more difficult to work with and in some cases unviable. Office buildings, particularly older ones, may have areas with insufficient natural light or structural partitions that complicate flat layouts. Similarly, noise insulation is a significant consideration, especially in multi-storey buildings with thin internal walls.


·       Navigating Location-Specific Issues: The location of the development is critical to its success. Even though PDR may allow conversions in various commercial settings, properties located in industrial estates or less desirable commercial zones may face issues with mortgage approvals. Lenders often view these areas as unsuitable for residential use, which can hinder the sale of newly developed units. As a developer, you’ll need to carefully select locations where demand for housing is likely to be strong.


·       Structural limitations: Because PDR restricts external alterations to buildings, as the developer you’ll need to work with the existing structure you’re faced with. This can pose challenges, particularly when dealing with large office spaces where structural elements like columns or partitions may obstruct the creation of functional living spaces. Adapting these buildings to meet residential standards without external modifications requires careful planning and isn’t always possible.

Getting the most out of permitted developments

So how should we make the most of PDR given the benefits and limitations? From our perspective, there are a few key things that will govern whether a permitted development is a success or not.
To maximise the potential of permitted development rights, you should:

·       Select the right property and location: Properties in prime locations, such as high streets or areas close to transport links, are often the most viable. High street properties, particularly those above retail units, typically have large windows and ample light, making them ideal for conversion into residential flats.


·       Plan for the end user: As a developer, you should design with the future residents in mind. Converting spaces in well-connected areas with access to amenities ensures higher demand and long-term viability. For example, a property near a station or high street can be marketed effectively as a desirable residential unit. This makes a difference.


·       Engage with experienced professionals: While permitted developments are simpler than full planning applications, ensuring compliance with regulations is crucial. Working with a skilled architectural team can help design solutions that optimise space, light, and layout while staying within the permitted development parameters.

How VM Finance can help

At VM Finance, we provide bespoke funding solutions tailored to the needs of our clients and their development goals. Permitted developments are an exciting development option that could bring real benefits to many areas where retail and office space has fallen out of use.

If you’ve got a permitted development in mind and are looking for a funding partner, why not give VM Finance a call?

We’d love to see what your plans are and if we’re the right fit to help you make a success of it.