Radical Shake Up of the Use Classes System

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Location: England

On 21st July 2020, five separate pieces of planning legislation were announced by the Government, including radical changes to the Use Classes Order.

Changes made to the Use Classes Order through the Town and Country Planning (Use Classes) (Amendment) (England) Regulations 2020 include the revocation of Use Classes ‘A’, B1 and D, and the introduction of new Use Class E (Commercial Business and Service), and F.1 (Learning and non-residential institutions) and F.2 (Local Community Uses).

Please refer to the full changes on the PDF download below and here.

Full changes of the Use Classes System, 21 July 2020

 

These changes were laid before parliament on 21st July 2020 and come into force 1st September 2020. Notwithstanding this, there is a ‘material period’ from 1st September 2020 to 31st July 2021, which applies whereby the NEW use class system does not apply to permitted development rights i.e. Old Uses Classes (such as A1, A2, A3 etc. will still apply for Permitted Development until 31st July 2021).  Pegasus Group presume that this period is limited with the intention of the Government to amend permitted development rights before August 2021 to reflect the new use classes.  The legislation also ensure that existing Article 4 Directions removing permitted development rights will remain in place in reference to the previous use classes system into the future.

The changes to the Use Classes Order apply to England only. Whilst the Use Classes Order usually applies to both England and Wales, Wales has devolved planning powers so the revisions to create new classes and revoke uses A, B1 and D apply to England only.

The new amalgamated Use Class E (Commercial, Business and Services) from 1st September 2020, removes the ability for Local Planning Authorities to determine whether it is in the public benefit to allow or refuse changes of use within the new ‘E’ class, such as shops to restaurants to indoor sports facilities, offices, studios, health clinics and light industrial processing units. There is an opportunity here for landlords to consider any ‘use’ within this new Use Class E, to change to another, within the same Use Class (as per the table above) without going through the usual planning application process.

However, in reality, such use changes are still constrained by:

  1. Any extant conditions on existing planning permissions and legal agreements (such as s106);
  2. Market conditions;
  3. Legal constraints such as restrictive covenants, obligations within Heads of Terms, etc.
  4. Any physical, external alterations to a building (required to accommodate the proposed use) would still require separate planning permission.

Jim Tarzey, Pegasus Group Chairman (London)Jim Tarzey, Pegasus Group Chairman and Executive Director for Planning in London says:

“These changes are long overdue and I am relieved that the Government have now intervened in such dramatic fashion. They will have huge long term ramifications for Planning Authorities in their ‘plan making’ process , who may now allocate sites for ‘E’ classes, which can cover a whole host of new uses. There will be an immediate impact on ‘decision making’ by Planning Authorities, who even from my very recent experience during Lockdown have relied on antiquated retail policies in their Development Plan to resist proactive attempts from some of my restaurant clients to expand their businesses into adjacent shop units. The changes will also have ramifications for the investment strategies for landlords and developers who will look to see what ‘use’ will bring most value to their site, but will have greater certainty and confidence to progress schemes on the basis of guaranteed pre-lets without the risk of planning.

These changes will create new locational opportunities where previously planning applications were necessary and could have failed on issues such as the loss of employment floorspace, or the loss of retail and active ground floor uses within designated centres or frontages. This will, without doubt, increase the range of potential occupants in many cases, leading to inflationary pressure on commercial rents and increased competition for businesses. As a result, it is certain that our ‘high streets’ will see significant change in the coming years, with a likely reduction in retail and an increase in cafes/restaurants, gyms/indoor leisure and offices.

There is certainly a need for the planning system to be more guided by market forces and to be more flexible in allowing our ‘high streets’ to adapt to the uncertain times that we face, and these changes to the Use Classes Order allow for that.”

Keith FenwickKeith Fenwick, Senior Director for Planning in Birmingham says:

“The changes raise important questions about the continued value of local plan policies related to primary and secondary retail frontages. Such policies, often cast from work undertaken many years ago, have failed to keep pace with the reality of a dynamic and now rapidly shrinking High Street. Some clients are still having to argue against such restrictive policies to gain a presence on the High Street, when vacancies abound and investment which brings footfall and customers to a town centre ought to be welcome.

“The introduction of the Class E use, may well mark the end for such anachronistic distinction which was largely driven by the deregulation of banks and building societies in the 1980’s, at a time when there was concern that the High Street would be dominated by financial and service providers.”

With thanks to Chairman and Executive Director, Jim Tarzey, Senior Director, Keith Fenwick, Director, Henry Courtier, Principal Planner, Rebecca Grace, and Principal Planner, Jonathan Coombs who all contributed to this article.

For more information please contact Pegasus Group on enquiries@pegasusgroup.co.uk or call 0333 0160777.

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