Flexible Use Classes - Post Covid Changes
As the United Kingdom gradually emerges from the pandemic, we're starting to resume our old routines. Yet, the sight of once-bustling areas now empty, with boarded-up buildings and 'To Let' signs, serves as a poignant reminder of the challenges we've faced. Despite this, there's a sense of optimism on the horizon.
It's evident that returning to 'normal' won't happen overnight. Achieving it will require significant changes in how we live and work. Businesses are reconsidering their operations and what that means for employees and workplaces. Hybrid working is becoming the norm, and online shopping has become deeply ingrained in our society.
In response, various industries are seeking innovative ways to repurpose vacant spaces, with local authorities actively encouraging diverse investments to revitalize communities.
The use class system in England underwent substantial changes on September 1, 2020, with the introduction of the Town and Country Planning (Use Classes) (Amendment) (England) Regulations 2020 (SI 2020/757). Under these regulations, if a property previously fell under one of the following use classes: Class A1 (shops), Class A2 (financial and professional services), Class A3 (restaurants and cafes), or Class B1 (Business), it will now be categorized under the new Class E (commercial, business, and service).
Part 3 of the General Permitted Development Order 2015 (GPDO) deals with changes of use, but not all changes of use fall under this order. Planning permission isn't necessary when both the current and proposed uses belong to the same 'use class', or when the GPDO permits changes to another specified 'use class'.
For instance, switching a off-licence or supermarket shop to a Beaty clinic doesn't need planning permission since they belong to the same 'use class'. Similarly, the GPDO allows a restaurant to be changed into a shop or an estate agency without planning permission.
However, even if a change of use doesn't require permission, any external construction work associated with it might still need planning permission.
The changes introduced by the Regulations aim to facilitate the repurposing of buildings to meet the evolving needs brought on by COVID-19. While tenants may welcome the flexibility provided by the new Class E, landlords may face challenges in managing tenant relationships and maintaining control over their properties.
Tenants are likely to appreciate the broader scope of Class E, which allows for easier adaptation of space to suit their needs. However, landlords will need to be cautious when granting leases to ensure that the permitted use aligns with the tenant's specific business, as Class E may be overly broad and limit the landlord's ability to manage their portfolio effectively.
The shift to a broader use class may also lead to changes in the nature of business parks and retail parks, with a mix of non-retail and light industrial uses becoming more common. While this could breathe new life into deserted areas, it may also result in vacancies and decreased appeal for traditional retail tenants.
Local authorities may find their ability to shape area development limited by the Regulations, as individual landlords ultimately determine property use. Landlords should consider existing planning permissions, legal agreements, and potential planning requirements when making changes within Class E.
Despite potential challenges, the Regulations provide landlords and developers with more confidence in proposing developments and pre-lets. However, the increased range of potential occupiers and interchangeability of uses may lead to a leveling out of property valuations.
