New change of use rules introduces greater flexibility

The COVID-19 pandemic has fast-tracked a major reform to the use classes planning system, with new rules coming into effect on 1 September 2020. Under the 1987 Use Classes Order, businesses premises were categorised into four different use classes, within which a business could change how it used its premises without planning permission. These were:

  • Class A: retail, food and drink, financial and professional services
  • Class B: offices, industry and places of work
  • Class C: homes and residences
  • Class D: leisure, assembly and institutions

Now, however, these classes have effectively been revoked and a new and much broader Class E for ‘Commercial, Business and Service’ use has been introduced (among other changes) to enable businesses to rapidly diversify in this time of great change. The new class means that businesses properties in the following sectors can now change to a greater variety of uses without planning permission, including:

  • Shops
  • Financial and professional services
  • Restaurants and cafes
  • Offices
  • Gyms, nurseries and health centres
  • Other suitable town centre uses

How will this affect commercial landlords?
Of course, it will entirely depend on the landlord’s situation, but many have welcomed the change as excellent news. For example, it could make it much easier to let the thousands of retail units currently standing empty across the country, as a change of use within the new Class E will open up the market to a greater variety of potential business tenants.

Some landlords, however, may now wish to exert greater control over changes of use than is now offered under the new system. They can do this by making changes to the lease (e.g. through permitted use clauses specifically defining the uses to which the premises can be put). On the other hand, according to a professional statement from the Royal Institute of Chartered Surveyors (RICS) effective from 1 September 2020, landlords should avoid being too prescriptive with permitted uses in order to protect the value of the premises and any other adjoining premises that they own.

Opposition
This change to the use classes has not been met favourably by all and Judicial Review proceedings are underway. For the time being it is advisable to seek specialist advice before agreeing the Permitted Use provisions for any new Lease.

Strong legal advice in a time of change
Here at Woodfines, our Commercial Property team are well versed in all the latest developments currently impacting commercial landlords. If you have been affected by any of the issues explored in this article, then please contact us for sound legal advice at Commercialpropertydepartment@woodfines.co.uk.

– Reena Mistry

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