Alex Morton of Policy Exchange: How the planning system can be changed to quickly help to increase the supply of new homes

Alex Morton is Senior Research Fellow on Housing and Planning at Policy Exchange, which today publishes More Homes: Fewer Empty Buildings. He sets out below why the reforms it proposes are needed.

Today Policy Exchange publishes More Homes: Fewer Empty Buildings.  This proposes relaxing the rules around changing buildings from employment and retail uses to homes, and allowing land currently designated for commercial uses but left undeveloped for more than a year to convert to residential use without the need for fresh planning permission.

Current problems are caused by a planning system that is straight out of the 1940s collectivist ‘government knows best’ textbook.  17% of commercial buildings are currently empty – almost six times the rate of empty homes.  This isn’t just a result of the recession, but long term changes that mean many offices and shops are now no longer suited for their current use.  Internet shopping, faster stock turnaround and customer change means many older retail premises are not viable.  Similarly, changing employment needs mean much lower demand for older office buildings that are not suitable for open-plan spaces, air conditioning or modern computer-cabling.

Yet despite this, councils often refuse to allow a building to change to residential use despite a widespread and widely acknowledged housing crisis. Often the result can be derelict or half-empty buildings that do nothing to boost a local area’s employment or high street.  Planning regulations should be used to stop buildings changing from a more desirable to a less desirable use without good reason and oversight, not to create urban blight and prevent brown field land being recycled to a better use.  Who wants to live next to empty or derelict premises compared with a new home?  Making this change would spur growth over the next twelve months as currently under used premises are refitted and refurbished into new homes, and unused commercial land is developed for new housing.

Our proposed change would allow for change of use for a building only from commercial to residential use, not vice versa.  But even so, to allay potential concerns we propose possible safeguards.  Firstly, we propose some village amenities are excluded (until the community Right to Buy is operational). Secondly, automatic conversion should only be allowed if a building has been vacant for twelve months or more.  Thirdly, if this isn’t the case, then only 50% of the floor space of such buildings could convert without planning permission.  And of course any windfall gains for landowners should be shared with local communities and people through the Community Infrastructure Levy and New Homes Bonus mechanisms that government is creating.

This rule change (even with safeguards) would stop councils from blocking change of use on spurious grounds.  When a building was clearly not viable for its current purpose it would no longer remain vacant because of council obstinacy.

Some will argue this is removing a hidden subsidy for business.  Currently – with local authorities force up the supply of space offices and shops while restricting the numbers of new homes.  But high housing costs only lead to demands for higher wages, meaning any advantage is largely illusory.  If government really wants to be helping business, it should grasp the nettle of business rates, which strangle many small businesses.

This proposal is just one of Policy Exchange’s suggestions for a better planning system.  It could be introduced relatively easily and quickly, and – best of all it could have an immediate impact on the supply of badly needed new homes.