Mention Article 4 to property investors, and we usually think about planning permission, HMOs and property conversions. But what exactly is Article 4? How does it work, and why is it so important for property investors?
What is Article 4?
Article 4 of the EU’s Markets in Financial Instruments Directive (MiFID) doesn’t relate directly to UK property investors or planning permission as it primarily governs financial markets and investment services more generally across Europe.
However, the term “Article 4” is also used within UK planning legislation, specifically referring to Article 4 Directions under the snappily named Town and Country Planning (General Permitted Development) (England) Order 2015.
Article 4 is crucial for UK property investors and developers as it can significantly impact planning permissions and development rights.
Therefore, Article 4 can make the fundamental difference between whether or not a potential HMO or other property project is viable.
Development Rights and Article 4
Permitted development rights allow certain building works and changes of use to be carried out without needing a full planning application.
Article 4 Directions enable local planning authorities (LPAs) to withdraw permitted development rights in specific areas. Specifically, when an Article 4 Direction is in place, property investors must obtain full planning permission for developments that would otherwise be automatically permitted.
Impact on Development Projects
For property investors, Article 4 Directions can have a significant impact on the feasibility and profitability of development projects. These directions can restrict changes such as converting offices to residential units, extending properties, or creating houses in multiple occupation (HMOs) in designated areas.
By removing these rights, councils can control and manage development of local areas more closely to align with local planning policies and community interests.
Protecting Local Character and Heritage
1. Preserving Area Character
One of the main reasons LPAs issue Article 4 Directions is to preserve the character and heritage of specific areas. For property investors, this means that developments in these areas must be carefully designed to meet strict criteria, ensuring they are in keeping with the local aesthetic and historical significance.
While this can lead to additional costs and longer timescales for obtaining planning consent, it can also help maintain the value and appeal of properties in historically significant areas.
2. Balancing Development and Conservation
While Article 4 Directions can limit certain types of development, they also offer a balanced approach to growth and conservation. For property investors, understanding the nuances of these directions allows them to strategically plan projects that contribute positively to the community while respecting conservation goals. This can enhance the reputation of investors as responsible developers who value local heritage.
Managing Housing Supply and Quality
1. Controlling Conversion Rates
In many urban areas, particularly in larger towns and cities, local planning authorities (LPAs) use Article 4 Directions to control the rate of conversions from offices and retail space to residential.
Uncontrolled conversions can lead to a shortage of commercial spaces and an oversupply of substandard residential units. For property investors, these directions mean that they must consider the quality and suitability of their conversion projects, promoting better living standards and sustainable development practices.
2. Ensuring Sustainable Development
Article 4 Directions help ensure that developments meet local needs and contribute to sustainable urban growth. Property investors must demonstrate that their projects provide adequate amenities, green spaces, and infrastructure support.
This holistic approach to development not only aligns with planning policies but also enhances the long-term value and desirability of properties.
Strategic Planning and Risk Management
1. Navigating Planning Risks
For property investors, awareness and understanding of Article 4 Directions are crucial for strategic planning and risk management. These directions can introduce uncertainties and potential delays in the planning process.
By conducting thorough due diligence and engaging with LPAs early in the project planning stages, investors can mitigate risks and ensure compliance with local regulations.
2. Influence on Property Values
Article 4 Directions can influence property values both positively and negatively. While they can limit certain development opportunities, they also help preserve the unique qualities of areas, which can enhance property values.
Property investors need to balance the restrictions imposed by these directions with the potential for long-term value appreciation in protected areas.
The Final Word
Article 4 Directions under UK planning legislation play a crucial role in shaping development practices, protecting local character, and ensuring sustainable growth.
For property investors, these directions require careful consideration and strategic planning. By understanding the implications of Article 4 Directions, investors can navigate the complexities of planning permission, contribute to community goals, and enhance the long-term value of their investments.
If you haven’t already, try to make contact with your local planning department. They are generally approachable and happy to discuss local planning regulations, or any specific ideas or plans you have.
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