What’s the use?: The great planning use class shake-up

New planning regulations promise greater flexibility for properties to be repurposed as part of the government’s Covid-19 recovery strategy. Dinah Patel, Kate Lias and Leah Morgan look at the detail On 21 July 2020, the government issued new regulations making sweeping changes to the Town and Country Planning (Use Classes) Order 1987 – hailed as some of the biggest alterations to town centre planning in more than 25 years. The primary focus of the overhaul of the Use Classes Order is to allow businesses flexibility to satisfy changing demands. The new regulations form part of the government’s plan to help the country recover from the pandemic, captured in the prime minister’s pledge to “build back better, build back greener, build back faster”, and will be complemented by a scheme to accelerate infrastructure development. What’s changing and when? The Use Classes Order groups different uses of buildings and other land into “use classes”. A change of use within a single use class is not “development” and therefore does not require planning permission. The changes made by the new regulations create three new use classes in relation to England and are contained in the new Schedule 2 to the amended Use Classes Order. The Town and Country Planning (Use Classes) (Amendment) (England) Regulations 2020 will come into force on 1 September 2020 and provide: 1. A new Use Class E (commercial, business and service) The new Class E is very wide. It will include retail, food, some services, gyms, healthcare, nurseries, offices and light industrial uses. This new use class will provide greater freedoms to move between uses, allowing businesses to adapt to changing circumstances and to respond more quickly to the needs of their communities. A building may be in a number of uses concurrently or may be used for different uses at different times of the day. This is also intended to reduce the cost and time burden of planning applications for businesses. The new regulations do not include pubs and bars (previously class A4) or hot food takeaways (previously class A5) within the new Use Class E, to avoid struggling shops changing into 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. 2. A new Use Class F1 (learning and non-residential institutions) The new Class F1 incorporates uses from the former D1 (non-residential institutions) along with some of the former D2 (assembly and leisure) which are more likely to involve buildings which are regularly in wider public use, such as schools, libraries and art galleries.  3. A new Use Class F2 (local community) The new Class F2 takes in some former D1 (non-residential institutions) and D2 (assembly and leisure) use classes which provide for group activities of a more physical nature – swimming pools, skating rinks and areas for outdoor sports. It also includes buildings where the use is principally by the local community. Alongside community social facilities, Class F2 includes what would be considered shops serving the essential needs of local communities. This is defined as a shop mostly for the sale of a range of essential dry goods and food to members of the public where there is no commercial class retail unit within 1,000m and the shop area is no larger than 280m². This provides some protection for such shops while placing those shops found on high streets and town centres in the new “commercial” class. 4. Unchanged use classes Use Classes C1 (hotels), C2 (residential institutions), C3 (dwellinghouses), C4 (small houses in multiple occupation), B2 (general industrial) and B8 (storage and distribution) remain unchanged (except for a new cross-reference in B2 to the new commercial class, and houses in multiple occupation with more than six residents now becoming a sui generis use). 5. Sui generis All other uses become sui generis where they fall outside the defined limits of any other use class. Pubs and bars, hot food takeaways and cinemas, all of which were formerly within a use class, will no longer fall within one, with no permitted changes, meaning planning permission will be required to change use. Transitional arrangements From 1 September 2020, where a property is being used for one of the original use classes, that property will be treated as if it is being used for the corresponding new use class. All new planning applications (including variations and reserved matters approvals) will also be determined by reference to the new use classes. However, a planning application submitted (or deemed to have been submitted) before 1 September 2020 which refers to uses or use classes which applied in relation to England on or before 31 August 2020 must be determined by reference to those old uses or use classes. The regulations also provide transitional provisions retaining permitted development rights based on the classes that were in place prior to the new regulations. A property will continue to be subject to any PDRs that it was entitled to on or before 31 August 2020. These transitional provisions will remain in place until 31 July 2021, when new, revised PDRs will be introduced. Existing and future commercial leases Despite the government’s intention to introduce greater flexibility for commercial tenants through the new regulations, for many the terms of their existing lease will stifle that flexibility. This stems from leases traditionally limiting the use of premise to a specific use within the Use Classes Order. It is common for retail premises to be restricted to use as a retail shop within class A1(a) of the Use Classes Order (as at the date of the lease). This will mean that existing commercial leases with such restrictions will be “stuck in time”, so to speak, unless the landlord agrees to a wider use. In other existing commercial leases, the permitted use of the premises may be limited to a specific use within a use class of the Use Classes Order “from time to time in force”. For a lease that currently permits a retail shop within use class A1(a) with the ability to request the landlord’s approval for other uses within use class A1, for example, it is unclear what applying the new regulations will mean. Given the huge changes that are being introduced, there may well be confusion as to what the permitted use under any such leases is and what the tenant’s ability to apply for a new use extends to. Unlike consent mechanisms commonly seen in commercial leases, whereby the landlord must act “reasonably” when granting consent, landlords can use their discretion in deciding whether they are willing to allow a tenant to change the use of the premises. This means that a landlord does not need to act “reasonably” when considering a change of use of the premises unless the lease expressly says so. Landlords may also have “tenant mix” policies in place for retail outlets that further restrict permitted uses. Even when a landlord is prepared to allow a change of use, it is common for leases to limit changes of use to other uses within a specific use class. It remains to be seen how landlords will seek to apply the new regulations in leases entered into after 1 September 2020, but given how wide the new use class E is, a balance will need to be reached between a landlord’s need to retain control and protect its interest in the property and tenants’ desire for flexibility. In principle, the new regulations offer a refreshed planning platform that could invigorate town centres. In reality, only time will tell whether the new regulations will have the desired effect, but for now we will have to eagerly await the promised guidance that is to be published alongside the regulations to establish the practical implications of the revamped rules. Dinah Patel is a director and Kate Lias and Leah Morgan are associates in the real estate team at Fieldfisher LLP Photo © Jack Dredd/Shutterstock