New Permitted Development Rights 2024: Converting Houses into Flats

Introduction

In an exciting development for the property market, the government is set to introduce a groundbreaking Permitted Development Right in 2024, allowing the conversion of single houses into two separate flats while preserving the original façade. Chancellor Jeremy Hunt announced this during the Autumn Statement 2023, with a comprehensive consultation expected in the early months of the New Year.

Understanding the Shift in Regulations

Until now, the division of a house into flats required a full planning process, making it a complex and time-consuming endeavor.

To convert a house into 2 flats, planning permission is required. This is because dividing a house into flats is regarded as “material change of use,” and as such, it’s subject to the stipulations outlined in Building Regulations. This means you must submit architectural plans that show how your conversion aligns with local planning policies, deal with challenges such as objections from neighbours and address everything from design considerations to building regulations.

The upcoming Permitted Development Right aims to simplify this process, streamlining the conversion of houses into two flats while maintaining the original exterior.

The Autumn Statement outlined the following:

The government is investing an additional £32 million across housing and planning to unlock thousands of homes across the country. This includes additional funding to tackle planning backlogs in Local Planning Authorities (LPA), alongside further reforms to streamline the system through a new Permitted Development Right to enable one house to be converted into two homes.

4.103 – Investing in housing supply

Implications and Speculations

While awaiting the government’s official consultation, it remains unclear whether the new regulations will address the possibility of combining two flats into one house. Speculations suggest that certain restrictions, such as exclusion from listed buildings or conservation areas, may apply, and prior approval might be necessary. Detailed information will be available once the consultation is released.

Who Stands to Benefit?

The proposed Permitted Development Right is poised to offer significant advantages to homeowners, landlords, and developers. The potential for increased returns on investments through the conversion of houses into flats, both for sale or rent, is a noteworthy aspect. In some cases, dividing a house into two flats can enhance the overall value compared to leaving it as a single dwelling.

However, there is also worry that removing the need for a sign-off from the council could have a negative impact on communities and neighbourhoods, without giving residents their say.

Source: This is Money

Addressing Housing Challenges

With these new regulations making the conversion of houses into flats easier, it has the potential to address a number of housing challenges the current UK market faces. This includes:

  • Alleviating pressure on housebuilding: Given the current issues associated with housebuilding, including the costs of raw materials, labour shortages and market demand, this new legislation has the potential to alleviate some of this pressure.
  • Contributing to a greater supply of rental properties: Particularly smaller and more affordable units.
  • Addressing the current shortage of rental accomodation: In recent years, a larger proportion of private landlords have been exiting the market rather than entering it, while demand from renters is increasing. The growing concern that there is a shortage of rental properties to meet this demand could be alleviated by this Permitted Development right.
  • Helping stabilise prices and rent: In the last three years, the average UK rent has risen by almost 32% from £974 a month to £1,283. A wider supply of rental properties means rent prices can be more easily controlled.

Benefits for Landlords and Property Developers

  • Streamlined Process: The Permitted Development Right saves time and costs, eliminating the risk of acquiring a property before obtaining planning permission.
  • Increased Value: Two flats often have a higher market value than a single house, providing landlords and developers with the potential for increased returns.
  • Dual Rental Income: Existing landlords can convert a house into two flats and receive two rental incomes from the same property, potentially yielding a higher overall return.
  • Flexible Options: Landlords can choose to sell one flat and retain the other as an investment, offering opportunities to pay off mortgages and boost the overall value of their property portfolio.
  • Confidence for Developers: Property developers can move forward with acquisitions and conversions with increased confidence, knowing that the new regulations support their intentions.
  • Refinancing Opportunities: Once converted, the property’s increased value allows for more realistic refinancing options, providing funds for further property portfolio expansion.

Costs to Consider

Before diving into conversions, developers should carefully evaluate costs against potential returns:

  • Dual Entrance Setup: Installation of two front doors within the inner hallway, leading to the stairs and the ground floor flat.
  • Additional Fixtures: Costs associated with fitting a bathroom in the downstairs flat and a kitchen in the upstairs flat.
  • Infrastructure Adjustments: Expenses related to fitting a separate boiler and heating system for the upper flat, as well as splitting water, gas, and electricity meters.
  • Parking Space Creation: Repurposing the front garden or driveway to create separate parking spaces.

Conclusion

As we eagerly anticipate the official government consultation, these upcoming Permitted Development Rights signify a significant step toward a more streamlined and profitable landscape for property conversions in the UK. Stay tuned for further updates on this transformative development here at HMO Designers.

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