Hotels: Checking out of hotels and into homes

The new proposals have been made in a further effort to boost housing supply. The Government estimates that in the seven years leading up to March 2022, permitted development rights have delivered over 94,000 new homes representing approximately 6% of the built units within that period.

Although hotels are a key pillar of the UK’s tourism economy, in areas of high housing needs, hotels and other C1 uses may serve their local community better as repurposed residential dwellings. Therefore, the Government is proposing to allow the change of use of hotels, boarding houses or guest houses (C1 use class) to dwellinghouses (C3 use class) through either the expansion of the Commercial, Business and Service use to dwellinghouse permitted development right (Class MA of Part 3 GDPO) or through the creation of a new permitted development right.

This proposal has caused a stir in the planning world, as, in practice, the implementation of any new right may not have the Government’s desired effect of increasing the national housing stock where needed. Commentators have speculated that the impact would be felt much more in rural or seaside town locations where there are a proliferation of smaller hotels and guesthouses that would be better suited for conversion back to residential use rather than larger purpose built city hotels. However, smaller hotels and other C1 uses found in more rural/seaside settings are often integral to the area’s local economy, converting such C1 uses into dwellings may have a negative impact on the location’s ability to attract tourists which would have wider economic implications on other businesses and the local economy.

Larger hotels situated within urban city and town centres may not be able to make use of the proposed new right as hotel rooms tend to be smaller and may not meet the size parameters currently required for living accommodation. Most would probably also need some external works that would trigger the need for planning permission in any event, undermining the flexibility the new right purports to offer in locations where it would be most effective i.e., urban centres.

Furthermore, the conversion of hotels situated in more secluded locations may give rise to a plethora of issues as new residents would require local infrastructure and services to be provided e.g., health services, increased school capacity etc. which the developer would not be under any obligation to pay towards as the use of PD rights would not trigger any statutory contribution mechanisms. Lastly, councils situated within popular tourist destinations often have policy protections which seek to retain hotels and B&Bs within their towns and the introduction of the new right may weaken these important policy protections and lead to an overall decrease in tourist footfall.

Since the concept of allowing conversion of hotels to residential is still at consultation stage, it is still too early to be definitive about potential impact but hopefully the Government will take industry concerns into account.