Teignbridge councillors have criticised a national planning policy which means the council may miss out on money towards affordable housing.

Originally introduced in 2013, 'permitted development rights' (PDR) allow certain changes to be made to buildings and use of land without needing planning permission.

In August, the policy was expanded to allow vacant shops, restaurants and gyms to be changed into homes – a move designed to regenerate areas that may have struggled during the pandemic.

But Councillor Alan Connett (Lib Dem, Exminster & Haldon), leader of Teignbridge District Council, said at a meeting of its executive that it may mean a restaurant in Kenton converting into several flats, meaning it may no longer need to contribute around £70,000 towards an affordable home in the district – previously agreed as a condition of planning permission.

"£70,000 is small beer for many of our affordable housing developments, but in a village like Kenton it would have enabled the council, or housing association maybe, to have chipped in and bought a house and put that into the social housing stock," Cllr Connett said.

"Desperately needed, at a time when we're all reporting – the council's reporting, local news organisations are reporting the drying up of the private rented sector, of a move to Airbnb – that local families can't find homes in the privately rented sector. These are desperately needed houses.

"I can see why the government wants to try and assist business in the move to residential, rather than leaving business premises empty, but here's the direct impact on the local rural community which is going to cost us an affordable home and it's shocking, it really is."

Councillor Stephen Purser (Conservative, Teign Valley) echoed Cllr Connett's concerns and said he wanted stronger rules around permitted developments.

"I have an interesting case in a very rural village where, under permitted development, a barn can be converted into a five-bedroomed hotel, with no regard to infrastructure, roads or anything else, and that to me seems absolutely crazy.

"I accept some barns should be, or can be, converted into houses but a five-bedroomed hotel in the middle of nowhere might be a lovely idea but there ought to be a bit more control or local input, because there is no local input – it is permitted development, it goes through effectively on the nod and I certainly would like stronger rules around permitted developments."

Councillor Martin Wrigley (Lib Dem, Dawlish South), portfolio holder for housing, added: "It's very clear from down here that the problem is not the planning system in terms of providing houses.

"The problem is not that not enough houses are being given permission – there is nationally some million houses with permission that have not yet been built, so [the government] are trying to fix the wrong problem."

He added the council needed to "focus on affordable houses, socially rented houses, as we are doing with the 'Teignbridge 100' [the council's plan to build 100 additional affordable homes across the district]."

A spokesperson for the department for levelling up, housing and communities said: "All new homes, including those delivered through permitted development rights, must be of high quality and meet national space standards and building regulations.

"By delivering new, high-quality and sustainable homes on previously developed land, these rights help protect our cherished countryside and green spaces."

They added that while it is not usually possible for councils like Teignbridge to secure affordable housing as part of PDR proposals, such schemes are mostly providing so-called 'windfall housing' which become available for development unexpectedly, and a 'community infrastructure levy' may be payable in some circumstances.