Commercial, Business and Service Uses - New Class E - from 1 September 2020

Major changes are afoot for those owning, occupying, funding or developing commercial and business premises. On 21 July 2020 the Government laid a statutory instrument which will make radical changes to how high street and business uses are categorised in planning terms. Changes come into effect on 1 September 2020 and will apply to England only. We have provided a summary table below on the sweeping changes but first we consider the key implications for those in the commercial property world.

What are the general implications?

The policy aim is for new flexibility to encourage vibrant, mixed use town centres through greater freedom to change to a broader range of compatible uses which communities expect to find on modern high streets. Greater flexibility was needed to allow landlords and occupiers to react to rapidly changing market conditions on high streets, which existed before the coronavirus pandemic and have only become even more acute with it. To an extent any building with a "shop front" now forms part of a much wider use class and has the agility to be used for any use falling with the old Classes A1- A3 and B1 with more recent additions to high street uses, such as gyms, also being included. The changes are also not all one way – the removal of the only recently created Classes A4 and A5 will make it harder to create or remove pubs and takeaways.

As always with changes of use, it is important to remember the Use Classes Order is but one part of the jigsaw. Significant external physical alterations will still require planning permission, whilst Buildings Regulations, controls on Listed Buildings and licencing requirements remain. Nevertheless, the new use class could drive a coach and horses through local planning authorities' town centre strategies.

What are the implications for property owners and occupiers?

At first sight they may seem significant. Restrictions on use in commercial leases often refer to use classes, although in most cases do identify a particular use within that class. However, if the restriction is more flexible and reference is made to the Use Classes Order as amended (it frequently isn’t), landlords and tenants may want to consider how these greater freedoms could affect valuations, any rent reviews and whether it affords greater flexibility to the tenant in repurposing the property.

In practice, controls over assignment, underletting and alterations are likely to mean that any tenant's enthusiasm is short lived. For instance, the landlord may have absolute discretion on whether the tenant could install external plant (such as flues) which could scupper that plan to change your office into a restaurant.

More significant are the wider options which owners may have when the lease comes to an end. In some circumstances, where business tenants are protected by Part II of the Landlord and Tenant Act 1954, the changes may remove one of the obstacles faced by landlords wishing to oppose renewal on own use or redevelopment grounds if an alternative use may be more lucrative. They will, however, still have to comply with planning requirements for any physical works to the property.

Table of changes

  • A1 (shops) but see F2 below
  • A2 (financial and professional services)
  • A3 (restaurants and cafes) and
  • B1 (offices, research and development and light industry).
  • Indoor sport, recreation and fitness facilities (part of D2)
  • Clinics and health centres, creches, day nurseries and day centres (part of D1)

E (commercial, business and service uses)

The new Class E allows for an extremely broad range and mix of uses. It recognises that a building may be in a number of uses concurrently or that a building may be used for different uses at different times of the day.

  • Schools, non-residential education and training centre, art galleries, museums, libraries, public and exhibition halls, places of worship and law courts (part of D1)

F1 (Learning and non-residential institutions)

Changes of use within this “Learning Use" class do not require planning permission.

  • Shops no more than 280 sqm mostly selling essential goods (at least 1km from another shop) (part of A1)
  • Halls or meeting places for community use (part of D2)
  • Uses which provide for group activities of a more physical nature, including, swimming pools, skating rinks and areas for outdoor sports (part of D2)

F2 (Local community)

The class recognises the importance of small, local shops in meeting the day to day shopping needs of local communities, particularly in rural communities, large residential estates and outside main shopping areas generally and provides them some protection.

Hence a shop of not more than 280sqm mostly selling essential goods, including food and at least 1km from another similar shop will falls within F2.

  • A4 (Drinking establishments)
  • A5 (Hot food takeaway)
  • Cinemas, concert, dance and bingo halls (part of D2)

Sui Generis

The Government's view is that certain changes of use can give rise to important local considerations, for example, to protect local pubs or prevent the proliferation of hot food takeaways. These uses will now be classed as 'Sui Generis', meaning a planning application will always be required to change to or from any of these uses.

Residential, industrial and storage uses

The residential (C classes), general industrial (B2) and storage and distribution (B8) use classes remain unchanged.

Permitted development rights

Transitional provisions retain the permitted development rights for the classes that were in place prior to the new regulations coming into force. A building or use will continue to have any permitted development rights that it was entitled to on or before 31 August 2020 until 31 July 2021 when revised permitted development rights will be introduced.

The Government has also published significant changes to permitted development rights. We will shortly be producing a separate briefing note on changes to permitted development rights and implications for commercial properties.

What's next?

The Government has also promised further guidance to be published over the summer and has just issued its White Paper on more wide ranging changes to the local plan and development control systems (which will be the topic of separate briefing notes from us).