Planning deregulation - is it the answer?

The deregulation of planning controls is often presented as a panacea that will help increase housing supply and give individuals more freedom to extract value from their property or properties.

From the streamlining of planning regulation to the government’s red tape challenge, the answer to the provision of better outcomes for society appears to be – let the market decide. But is it always desirable to allow the market to arbitrate collective values? Is planning deregulation necessarily the answer?

Our research examines these questions through the use of two case studies: the extension of Permitted Development Rights that allows office to residential conversions and the partial deregulation of planning controls on short-term letting, which allows residents to rent out part or all of their property for up to 90 days a year without the need for planning permission. We did this in the context of four central London boroughs - Camden, Islington, RBKC and Westminster.

Office-to-residential (PDR): The rhetoric behind this change was to speed up housing development and to allow “underused” office space to be converted more easily. However, what has become clear especially in sought after property markets is that “underused” has become, in many cases, synonymous with “undervalued”. Indeed, despite occupation many offices are being converted to residential use and many of these are just the type of spaces needed by small businesses and start-ups. In fact, the Greater London Authority reports that as of March 2016, 1.6 million m² of office space in London had already been lost. This comes with the added sting of conversions not having space standards and not having affordable home requirements. In fact, many of our interviewees were concerned that the units provided were either too small or too expensive to meet local need.

Short-term-letting (STL): The Deregulation Act (2015) opened up the possibility of holiday rentals for households in London. What this has meant in practice is that there has been an aggressive spreading of short-term lets in the four boroughs we examined. Much of it was driven by the difference in normal monthly rents and those earned on platforms like AirBnB. As one Islington planner told us: “Some of the properties that we have been researching can be around £200 a night. These are massive amounts of money, so no monthly rent no matter how high can compensate for that.”

The planners we spoke to highlighted that many properties in central neighbourhoods were being used exclusively for the purposes of STL, potentially removing permanent housing stock changing neighbourhood facilities and creating nuisance for existing residents.

Local authority planners are charged with planning for “strong, responsive and competitive economies” and with ensuring a “supply of housing required to meet the needs of present and future generations”. None of this is easy to do in the best of times, but these two measures remove key tools planners have for at least trying to balance these needs.

The planners we interviewed were faced with trying to meet a growing demand for office supply all the while losing space to housing conversions that did not match local demand and at the same time seeing the growth of STL, which in localised areas impacted supply. None of this seems a particularly productive way address the needs of local communities. As cities from Copenhagen to New York to Berlin are highlighting problems with STL and with the changes to PDR in the UK now permanent, we must ask ourselves if the market truly can provide superior solutions for our cities.