Article 4 direction in Bath – latest news

As reported by The Bath Chronicle (http://www.thisisbath.co.uk/New-consultation-curbs-shared-housing-Bath/story-15523327-detail/story.html) the decision on implementation of the Article 4 planning direction in Bath has been deferred until March of 2013 in order to allow for further consultation. However, the council, in their March 2012 meeting, gave notice of “intent to enact” so it will be interesting to see what further information comes from any consultations.

As we understand it, the guiding premise for BANES behind enacting Article 4 in Bath is to balance out the community in HMO dominated areas. It is certainly true that Oldfield Park contains a high density of HMO properties – in some roads we know close to Moorland Rd, the density approaches 80 – 85%.

Oldfield Park is historically a family/working suburb of Bath  (during the late 18th century Bath changed from “a genteel spa town to a place of commerce and industry” (Forsyth). The farm fields of the lower southern slopes of the city started to be covered over by housing from 1873 (Upper Oldfield Park villas) and continued through the 1880′s. Oldfield Park became a “popular location for meeting the housing needs of Bath’s railway and Post Office clerks” – Davis & Bonsall). From our office in Moorland Rd, we regularly meet clients whose families have been here for generations.  

Common complaints from residents towards student/HMO properties include noise, parking, the outward appearance of homes, lack of involvement with the community, unsightly street furniture (especially To Let boards!) and the artificially increased population stretching local amenities/services without additional income.

Any Article 4 implementation would mean a C3 usage home (residential) would not be able to be turned into a C4 home (HMO) without appropriate planning permisson for change of use. However, such permissions would not be granted if the density of existing C4 homes within 100m was already above 20%. Given the saturation levels in Oldfield Park at present, it is practically certain that Article 4 would cap any further HMOs being created within a wide radius of Moorland Rd. However, the implementation would not affect current HMO properties. So, Article 4 would stop further saturation but not reverse current levels. In addition, any local families who wish to sell post implementation will find themselves with far less buyers to choose from (and potentially therefore less value on their home) if investors are out of the picture.

HMO properties are not just for students. Lower income professional/singles/couples, transient workers and temporary visitors all rely on such housing and there is a current lack of supply across the BA2 postcode anyway. Article 4 implementation would exacerbate this current trend.

Income from students does benefit the local area to an extent. Although Oldfield Park is considerably emptier during university holidays, some of the local shops and amenities derive considerable income from students. Would we have Sainsburys or the Velo Lounge on Moorland Rd if it were not for the student pound?

Inadequate housing or unsightly properties are a problem that needs to be addressed but is Article 4 the answer? Compulsory licencing of HMO properties, together with tougher requirements (monitoring tenant behaviour, upkeep of inside AND outside of properties, regular accreditation inspections?) would benefit both local residents and student tenants. BANES do say they will introduce more licensing aspects alongside Article 4 but will all landlords be covered or just those that choose to seek a license?

Article 4 would spread HMO accommodation further across the city BUT only if the attractive reasons for living in Oldfield Park were available elsewhere in the area. Students live in Oldfield Park in the first place because the Orange bus routes are convenient, the city is close by, the rents are more reasonable than the city centre and the typical architecture divides well into multi occupation homes. Given property prices in other close Bath suburbs, are these factors likely to be a) available or b)attractive to investors? 

One effect that BANES may not have anticipated with the current proposals on Article 4 is that they have already created a significant uplift in demand for potential HMO property within Oldfield Park. Investors are now rushing to purchase before any proposed deadline, raising local prices and pushing HMO densities ever higher as each month goes by.

Update on Article 4 direction for Bath HMO property

As promised in our last post, directors from Madison Oakley attended yesterday’s BANES/Arup feasibility workshop on proposed planning legislation changes for HMO property in Bath. We were joined by several of our local landlords and noticed a fair few more familiar faces in the audience! Several other agents attended as did developers, local councillors, student union representatives & local residents of Bath.

We note that Arup have undertaken to deliver their findings to BANES around Christmas, meaning that any implementation or further discussion will occur during 2012 (and likely to be Q2 2012 at that). It was also mentioned that other UK councils who have instigated an Article 4 have allowed a 12 month notice period prior to implementation. The majority of cities have also decided to implement throughout a city as opposed to targeting individual areas.

Sadly, the main focus of some attendees seemed to be on the “student problem”. This ignores the obvious fact that not all HMO properties in the city are occupied by students – in fact many young professionals & transient workers rely on house shares for reasonably priced accommodation in a very expensive city.

Figures were given on density of HMO properties within the city (highest in Oldfield Park but also quite widely spread across the city), as well as some extremely interesting statistics on anti social behaviour complaints (it came as a great surprise to some attendees that Oldfield Park as an area scores rather well in these stats against some other areas of the city not known for HMO density!).

It seems that the overriding ethos behind this proposal might be to “balance” or “disperse” the impact of students among the community. With so many HMO’s already existing within the city, it would be difficult to see how preventing another small percentage of homes being converted would fulfill this criteria. If the real complaints centre around student behaviour or rogue landlords, surely there are better legislative means to control the problem?

It was pointed out by some objectors to the proposal that a major reason students have congregated in Oldfield Park and Lower Weston is down to the Orange bus route – it would not be likely that investors and students alike would be comfortable moving to other areas of the city that are not served by convenient public transport routes.  In addition, if the Article 4 direction is implemented (and is not retrospective), there is more of a chance that areas of current high student density will actually stay student dominated areas for a very long time. Lastly, if the proposal was implemented, any existing HMO’s would be so attractive value wise to investors that they would be even more unlikely to be sold to local couples or families than at present.

A highly charged debate – we await Arup’s conclusions with interest!

Further update – as of 10/11/2011, we have received the following information from BANES

“The study on the potential to implement an Article 4 Direction to control the increase of HMOs in Bath is due for completion by early December 2011.The Council will be then consider the findings of this study, with a decision anticipated early in the new year. All of those on this contact list will be updated when there will be Committee discussion on this issue by elected members. Furthermore, should the Council decide to implement an Article 4 Direction additional public consultation will follow, which we will invite you to be involved in.”

Further update – as of 02/12/2011, we have received information from BANES that the draft report from Arup is now available and will be discussed at a Cabinet/DC Committee meeting on 14th March 2012. Early indications from the report are that the density threshold for HMO change of use might well be 20% and any Article 4 Direction is very likely to be implemented with a 12 month lead in time.

Melcombe Road, Oldfield Park

A prime Oldfield Park investment property, being sold as an ongoing concern with tenants in situ until June/July 2012. Superbly convenient for Moorland Rd (250yds to the north). The imposing bay frontage of the property sets the tone for the generous accommodation this home offers. Once through the front door the accommodation includes; Living room, kitchen, conservatory, bathroom and bedroom on the ground floor. Three further bedrooms and WC on the first floor. In addition, there is a useful loft area with 2 velux windows and stairs up from the first floor landing whilst the property also benefits from a garage to the rear. The property has gas central heating and double glazing.

From our office in Shaftesbury Road proceed around the corner into Beckhampton Road. Melcombe Road will be the third turning off to your right, just after Grahams, where the property will be found on your right hand side.

Historical Notes

One of the very last terraces to be built in Oldfield Park, Melcombe Rd was listed as Durley Park in directories and first appears in 1913 (as the home of Herbert Arthur, a local postman). The next resident, E.A Hunt (a baths attendant) moved in and out in 1914 as he was drafted for the Army. After a year empty, Mr W.M Williams took up residence in 1916 and stayed until at least 1940. His occupation is listed as staypresser (we believe this is involves garment making or sewing of some type).
The most prominent local landmark in the road was the Twerton Co-operative Bakery Depot (now offices). The Twerton Co-op was founded in 1888 by Benjamin Colbourne, a goods guard on the Midland railway, and encouraged by Jonathan Carr (mill owner in Twerton). By 1914, the Co-op had three branches (St Peters Terrace, Lyndhurst Rd and Moorland Rd), a coal depot, choral society, education committee and (in 1894) a co-operative cabinet makers business.

Article 4 Direction relating to Bath HMO (houses of multiple occupation) property

Buy to let landlords and potential property investors take note – we have received information from local sources that BANES intends to enact a Direction (Art 4/HMO/01) under Article 4(1) of the Town and Country Planning (General Permitted Development) Order 1995.

The Direction relates to development involving a change of use from a dwelling house (class C3) to a house in multiple occupation where between three and six unrelated people share a kitchen and/or a bathroom (class C4). It will remove permitted development rights across the city for this type of development from the date when it comes into force (we hear this is likely to be before Christmas 2011). 

This means that, in a short time from now, planning permission may well be required for a change of use from class C3 to class C4. 

Please also note the Direction is likely to apply to the entire city, not just to areas like Oldfield Park.

So, what is this likely to mean to the housing market in Bath? Well, for starters, anyone looking to buy to let to students/sharers from 2012 onwards might need to be prioritising buying an existing let (as any Article 4 ruling does not apply to current HMO’s). We don’t yet know what conditions BANES will put on granting planning permission for C3/C4 class change but it’s likely to involve the existing percentage of HMO property on any particular road (in other words, if there are already X% of houses in the road as HMO’s, the answer to any new applications would be a flat no). For residential buyers, the ruling is much better news as it will remove the vast majority of investment competition from the arena. At present, we have a few ideas of the potential impact on house prices and await further developments with interest.

Comment added 12/09/11 – one of our investor clients has just brought up a very interesting point – “BANES will have a very clear idea of density and landlords through their details on student rate relief but will a buyer be able to know in advance of making an offer on a owner occupied house what the density is for that particular road as to whether planning permission will be granted for HMO occupation?”

Comment added 29/9/11 – we have been told that a workshop event is being held by BANES Planning Dept in late October. The stated aim of the workshop is “undertaking a study to help us to understand the impacts of Houses in Multiple Occupation (HMOs) on local communities in Bath and to explore the opportunities for planning interventions (including a possible Article 4 Direction) to help manage these impacts.”

The project summary we have been provided with gives the following information;

 “In June 2011 the BANES Cabinet agreed to allocate funding to consider how planning controls (including an Article 4 Direction) could be used to control the spread and increase in Houses in Multiple Occupation (HMOs) in Bath. HMO concentration and the impacts of concentrated activity particular concern for the wards of Widcombe, Oldfield Park and Westmoreland which have a higher % of Houses in Multiple Occupation occupied by students, but there are other wards across the City, which may also be affected.

The Planning Department was instructed to progress a feasibility study to consider the potential for and scope of an Article 4 Direction and has subsequently appointed consultants Arup to support the planning department in making a recommendation to Cabinet.

An Article 4 Direction would mean that express planning permission would be required for a material change of use, although BANES will not be able to collect fees for processing the processing of these applications. Reasons for refusal of planning permission will still be required on a case by case basis. The study will consider the introduction permitted development rights for change of use from a dwelling house (Use Class C3) to a small HMO (Use Class C4), and define its geographical coverage.”

Directors from Madison Oakley will be attending the workshop

PLEASE NOTE – OUR UPDATE IS NOW LIVE ON OUR BLOG (27/12/2011). Use sidebar tag cloud to find via “HMO” or “Student housing”.

Buy to let investment – local advice notes

Headlines in the last week show rental demand at an eight year high and rising. We released a “to let” property on Monday and booked 16 viewings in 2 hours by Saturday – for a standard 2 bed Oldfield Park house, this is way above normal activity. We’re about to enter the season for student housing for the 2011 academic year, yet there are still first year students from August 2010 without accommodation.

All this evidence adds up to one clear recommendation – if you have finance to invest, you could do far worse than a property for your pension fund. Yes, the returns won’t be stratospheric but interest rates will remain low/static for some time, between 5 – 7% gross is achievable and we have just sold a 7 bed student house in Lower Weston that generated an 8.8% gross return. So, what type of property do you choose to sink your money into?

As far as we can tell, there are three main schools of thought locally. They are;

1) Student housing – typically central Oldfield Park (as close as possible to Moorland Rd) or Lower Weston (next to Orange bus route). Many investors overlook the smaller 3 lettable room houses (available for around £215,000 – £235,000) but our experience shows huge demand for these. 6 and 7 lettable room houses (£275,000 – £300,000) are hard to come by but will let instantly as students are forming larger groups over the last two years. There have been planning changes in the last 6 months that bear investigation but the local council have no current plans to enforce change of use regulations.

2) Family houses – if you don’t fancy the ongoing maintenance associated with student lets, try letting to those first time buyers who can’t afford the deposit to buy. Many of our clients in this bracket are looking to rent for several years and will look after the houses as if they are their own! Expect to pay £175,000 – £250,000 depending on how close to town you want the house to be but don’t overlook the modern houses at £175,000 as the rental return won’t differ much across the price range. As an example, a Blackmore Drive 2 bed 1960′s terrace will rent for £725pcm, whereas a Maybrick Rd 2 bed Victorian terrace won’t achieve much above £750pcm (but will cost you 70k more to buy!).

3) Flats – tap the bottom end of the market to attract the broadest range of tenants (and buyers if you want to sell on at some point) but watch out for the management charges. Always factor in the yearly service charge into the rental return. Expect to pay circa £150,000 for a quality 1 bed in the city centre or a 2 bed in Oldfield Park. The rental return will be the same for each, around £700 – £725pcm but you’ll expect to pay £600 – £1200pa in service charges. The up side with these homes is the largest pool of tenants and lack of responsibility for maintenance.

With all examples above, make sure the accommodation is good quality, clean, tidy and as spacious as possible. Gardens and garages are attractive but not entirely necessary and can be tiresome to maintain if the tenants don’t want to.

 Madison Oakley are an independent estate agent and letting agent in Bath. We are a small director led firm with over 50 years combined local experience.To find out more about us, do visit our website. We would always be delighted to receive comments via our blog or do feel free to call us on 01225 466525.