Changes to the Planning Use Classes to Revitalise High Streets

As part of wider changes to the planning system, the Government is changing the categories of use in the Use Classes Order from 1 September 2020 (in England only). The purpose is to better reflect the diversity of uses on high streets and in town centres - although the changes also aim to help those settings adapt to changing demands of society. This is one of the changes predicted by Ben Stansfield and Nigel Hewitson back in March, when discussing the impacts the COVID-19 pandemic will have on town and country planning.

What are the changes?

The new regulations which take effect on 1 September 2020 amend the Town and Country Planning (Use Classes) Order 1987 as it relates to England to abolish use classes A1-A5 (inc); B1; D1 and D2 and create three new use classes as follows:

• Class E - Commercial, business and service - (includes previous uses A1 (shops), A2 (financial and professional services), A3 (restaurants and cafes) and B1 (business))
• Class F.1 - Learning and non-residential institutions
• F.2 - Local community

New Class E is very wide. It will include retail, food, some services, gyms, healthcare, nurseries, offices and light industrial uses. Class F.1 and F.2 take in some of the current use classes D1 (Non-residential institutions) and D2 (Assembly and leisure). Some particular uses will no longer fall within a class, meaning planning permission will be required to change - including pubs and bars, hot food takeaways, and cinemas.

A full summary of the new use classes is in the table at the end of this note.

Why are the changes important?

High Streets across the country have been struggling during recent years as they fail to compete with online retailers and large out-of-town retail parks and shopping centres. The move to online shopping has been accelerated by the COVID-19 pandemic, as many traditional High Streets have been forced to close for the last few months and many customers feel uncomfortable shopping in person.

By creating a new "Commercial, Business and Service" use encompassing all of the uses outlined above, it will be possible to move between the uses without the need for permitted development rights or planning permission. This will give more flexibility to property owners and allow them to be more creative with their stores to offer mixed uses. For example, a property could operate as a shop during the day and a restaurant or a gym in the evening.

The Order has not included pubs and bars (previously use class A4) or hot food takeaways (previously use class A5) within the new Use Class E, to avoid struggling shops changing use to pubs and takeaways along the High Street without planning permission. Interestingly, this now means that the flexibility offered to pubs three years ago to change to a mixed pub/restaurant use ("drinking establishment with enhanced food offering") is no longer available.

What do the changes mean for landlords and tenants?

This is a difficult time for landlords of high street and town centre properties. These changes may help with renewal or reletting of properties with leases that expire around or after 1 September because the current or new tenant is less likely to need planning permission for their proposed use of the property.

Landlords should not be concerned about a loss of control. Planning permission for change of use is separate from a landlord's ability to control use of property - usually achieved through a specific obligation on a tenant to only use premises for specified uses. In most cases (particularly retail and leisure properties) this will be narrower than any of the existing use classes. Some leases allow change of use with landlord consent not to be unreasonably withheld or delayed and some may allow change of use within a use class without consent. Where that is the case, leases commonly specifically limit that to the use classes as they were at the date of the lease. The new classes will not therefore affect those positions.

As above, the welcome news for occupiers is that where a change or expansion of use is needed to develop business or unlock the disposal (assignment or subletting) of a property, planning permission will not be needed for many changes from 1 September 2020. The cost, hassle, delay and uncertainty of that process is taken away.

Most leases require the tenant to get the landlord's consent to both an application for planning permission and (depending on the lease terms) the change of use itself. If no planning permission is required then engagement from the landlord will be limited to the latter.

Should new leases refer to new Use Class E? This is unlikely. Tenants may welcome the flexibility of an open E class use but the uses within the class are so wide that landlords are going to require more control. For example, the prospect of a change of use from a restaurant to an office is unlikely to be commercially acceptable - even if subject to a landlord acting reasonably in giving consent. Leases will continue to refer to specific uses - and references to use classes may disappear altogether in town centre settings. Landlords will need to think carefully about what range of uses and flexibility they will permit in leases going forwards based on their intentions for the property and any wider place making strategy.

Table of new use classes in England from 1 September 2020