UK: Two Become One

Last Updated: 8 August 2017
Article by Katie Scuoler

Historically whether planning permission was required for the amalgamation of units has been a grey area for planning lawyers. However, it was a question which was seldom asked. In recent years there has been a strong trend in the central London residential market for the creation of substantial residential properties through the reconversion of previously subdivided houses, the amalgamation of purpose-built flats or adjoining houses, and lateral amalgamation of units. As a consequence, there has been increased focus on decisions regarding amalgamation. This article traces the recent evolution of decision-making regarding amalgamation.

When is planning permission required for a change of use?

Under s55 Town and Country Planning Act 1990 (TCPA) a change of use requires planning permission if it is a material change of use. While there is no exhaustive list of what constitutes a material change of use, s55(3) is clear that the conversion of a single unit into several units is a material change of use which requires planning permission. However, s55 is silent on the reverse position where two or more dwelling houses are merged to form a lesser number.

Certain operations of uses of land are not regarded as 'development' by virtue of s55(2) TCPA. Under s55(2)(f) TCPA and Art 3(1) of the Town and Country Planning (Use Classes) Order 1987 (the Use Classes Order), where a building is used for a purpose of any class specified in the schedule to that order, the use of that building for any other purpose within the same class shall not be taken to involve development of land. None of this makes clear where that leaves amalgamation. Is permission required or not?

Is the amalgamation of units a material change of use which requires planning permission?

The leading case on amalgamation is Richmond upon Thames London Borough Council v Secretary of State for the Environment, Transport and the Regions [2000]. Richmond concerned the refusal by the local planning authority, and then the subsequent grant on appeal, of a certificate confirming that the change of use of seven self-contained flats into a single dwelling house would be lawful. The local planning authority refused the certificate on the ground that the proposal constituted development under s55 TCPA. The applicant contended that the proposed change of use would not, as a matter of fact and degree, amount to a material change of use but, even if it did, it would be exempted from being 'development' by the Use Classes Order.

In reaching a decision, Lockhart-Mummery QC held that the extent to which a particular use fulfils a legitimate or recognised planning purpose (in terms of a purpose relating to the character of the land) is relevant in deciding whether a change from that use is a material change of use. He held that the amalgamation of these units gave rise to a loss of a particular type of (low-cost) accommodation, which was a relevant factor to be taken into account in considering whether the change of use was material. His reasoning followed Mitchell v Secretary of State for the Environment [1994], in which Saville LJ stated in the context of the determination of planning applications:

... it is undoubtedly the law that material considerations are not confined to strict questions of amenity or environmental impact and that the need for housing in a particular area is a material consideration.

Lockhart-Mummery QC considered that the inspector's approach, which had resulted in the grant of the certificate, had been flawed in that he had only considered the materiality of the change of use by reference to the lack of any marked change in the physical appearance of the building. In doing so he had ignored the nature of the uses, before and after, within the internal envelope of the building.

Given that the change of use was, or was capable of being, a material change of use, would it be exempted nonetheless from being 'development' by the Use Classes Order? The applicant argued that each of the seven units were in Class C3 use and so after amalgamation the new use would also be C3, with such a change permitted by Art 3(1). That argument was rejected. The judge held that it was necessary to look at the position 'before' and 'after' the amalgamation. As the 'before' use of the land was not 'use as a dwelling-house by a single person' (as in a single dwelling house), Art 3(1) did not apply. In reaching the decision the judge took account of the development plan policies which sought to limit the conversion of houses into homes in multiple occupation.

This principle requires decision-makers to look at the configuration proposed by virtue of the amalgamation and the use to which it will be put, and assess whether it will be the self-same building in the before and after scenarios.

The 'policy factor'

In Richmond the 'policy factor' was one of several relevant factors to be taken into consideration. The judge did not go as far as establishing that the inclusion of a policy factor meant that there had to be, or was, a material change of use. Nor did he decide that a change of use would be material where the policy factor was the only factor. In R on the application of Royal Borough of Kensington and Chelsea v Secretary of State for Communities and Local Government [2016] (regarding the Stanhope Gardens appeal), however, the Royal Borough of Kensington and Chelsea (RBKC) relied on the 'policy factor' as the sole determinant of whether planning permission was required.

The case concerned the grant of a certificate of lawfulness and planning permission for the amalgamation of two flats. On appeal against the refusal of the certificate, the council stated that it had seen:

... a gradual but steady erosion of the Borough's housing stock as existing flats have been joined together to create a smaller number of larger units, either as larger flats or single houses.

The council had a policy restricting the net loss of five or more residential units. Against a backdrop of increasing concern about the level of loss of residential units, in August 2014 RBKC had changed its interpretation as to how much amalgamation could occur without planning permission being required. Without any change in development plan policy, it started to take the view that any amalgamation which includes the loss of a unit will be development requiring planning permission.

The council maintained that while the proposed amalgamation would not have any effect on the character and use of the land, other than by the loss of one residential unit, the scale upon which amalgamations were taking place in the borough was having a material effect on reducing the number of dwellings in the housing stock, which was a matter of public interest. While noted by the inspector, he disregarded it because it had no support in policy.

Holgate J held that this approach was flawed, deciding that the local planning authority, in reaching a decision on whether a change of use is material, is entitled to rely upon its analysis of the effect of conversions upon housing supply. A decision-maker may have regard to the extent to which a planning consequence is, or is not, supported by planning policy when considering the significance of the consequence. As a result the inspector was obliged to consider whether that 'policy factor' was significant for the specific purpose of deciding whether the proposal fell within the scope of planning control. The judge held that simply because planning policy is silent in regard to a planning consequence does not indicate that it is of no significance to the application of planning control.

Materiality of the change

Following the Stanhope Gardens appeal developers are left with something of a postcode lottery. What amounts to a material change of use in one part of the country may not be in another part. Given the concentration of such cases in RBKC, appeal decisions offer some guidance on how the materiality of the change of use is considered.

In the Cheyne Gardens appeal the inspector dismissed an appeal against RBKC's decision not to grant a certificate of lawfulness for a sideways amalgamation of two flats into a single dwelling. The council maintained that the amalgamation would result in the loss of a unit of housing, which would contribute to the difficulties of meeting increased housing targets faced in the borough. RBKC put forward evidence that deconversions and amalgamations were anticipated to result in the loss of 400 homes over a five-year period. Set against that, London Plan Policy 3.3 imposes a minimum ten-year housing building target of 7,330 dwellings for RBKC, with an annual monitoring target of 733 homes. In addition, the general principles of the London Plan and RBKC policy support the increase of housing supply and maintenance of existing housing stock. In that context it was notable that the number of bedrooms provided would be reduced from four to two, with a resultant decrease in the number of residents which could be accommodated

The inspector considered that the loss of one unit should be considered against the annual target. Despite accepting that this would be an 'almost infinitesimal change' (and the loss of the single unit was under the five-unit threshold set in the RBKC policy), he nonetheless decided that it would 'as a matter of fact and degree have a significant impact in planning terms'. The inspector held that the existing use as two flats fulfilled a legitimate and recognised planning purpose in contributing to the housing stock of the borough, and that changes to a single dwelling may have significant consequences in reducing that stock, concluding that this is a matter that should be properly consulted and considered on its merits by means of a planning application.

Shift away from lawful development certificates

Given the emerging position that amalgamation may be a material change of use, it is not surprising that the most recent amalgamation appeal decisions in RBKC have concerned the refusal of planning permission, rather than the refusal of a lawful development certificate. How are such applications likely to be determined?

In the 77 Drayton Gardens appeal the inspector, applying the principles set out in the Stanhope Gardens judgment, concluded that the need for housing, in an area in which RBKC contended the average three-bedroom property costs £2.8m, was a planning purpose relating to the character of the land. Therefore, notwithstanding the absence of any amenity or environmental impact, the inspector concluded amalgamation would have significant planning consequences for the 'threshold purpose' of deciding whether planning control applies. When considering whether an enforcement notice ought to be quashed and planning permission granted, the inspector had regard to the council's performance against its housing target, fall in vacancy rates and housing needs assessment, concluding that the amalgamation would not affect the council's ability to meet its housing targets and the amalgamation would contribute to meeting an identified need for large units.

Similarly, in the Pembroke Cottages appeal, the inspector considered the amalgamation of a three-bedroom and a two-bedroom property would contribute to meeting the 'moderate need' for larger 4+ bedroom properties. Concluding that the council was likely to meet and exceed its five-year housing supply requirements, the loss of one small residential unit was not considered to be particularly harmful to the grain and mix of housing in the borough.

This is not an exclusively London issue. In January 2017, in the Benham Hill appeal, an inspector considered the refusal by West Berkshire Council of a certificate of lawfulness for the conversion of two single-bedroom flats to one dwelling. The inspector concluded that the loss of a one single-bedroom dwelling in a district with a 6.67-year supply of housing where two-bedroom units are more in demand would not be contrary to policy and would not be a material change of use. This case highlights that housing pressures mean that amalgamation is not just an issue for the central London bubble.

Where does this leave developers?

The amalgamation of multiple dwellings into a single unit will not automatically be a material change of use. Whether planning permission is required will largely turn on physical factors relating to the building and use of the building, the relevant local planning policy and considerations such as the current housing market demands in that area. The consequence is that an amalgamation may be a material change of use in one area, but set against a different housing market and policy background only a street away in another planning authority it may not. Similarly, whether permission is needed may change over time as development plan policies are published – permission only being required after adoption perhaps? It may even change, as in RBKC, when planning officers simply start to give more weight to a particular policy.

The policy tide is beginning to catch up and make matters slightly clearer. Westminster City Council policy already restricts the amalgamation of units but provides an exception for conversions which would provide a family home. As referred to in the Cheyne Place appeal, RBKC's emerging 'Local Plan Partial Review' includes a policy allowing amalgamation provided there is a net loss of one unit only, and the total floor space of the new dwelling will be less than or equal to 170 sq m gross internal area. As a result, going forward there is likely to be less reliance on general housing supply policies, with decisions centring on whether or not the amalgamation is supported by specific development plan amalgamation policies.

The concerns that have led to amalgamations requiring consent are legitimate. They can change an area and can lead to the loss of some types of accommodation. However, using planning policy to determine whether or not development is taking place, and therefore whether consent is required, seems wrong. It is an understandable but questionable judicial device. It would be far better for the legislation to be changed to allow a local authority to decide, in public and with reasons, that amalgamation in its area requires consent. That would provide certainty, and would be far better than the present jumble. 

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

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