Legal briefing | Planning, Real Estate Development, Real Estate, Environment & Regulatory |

New use classes

Overview

From 1st September we will have a new Use Classes Order ("UCO").  It will be significantly different from the current one, and the changes will override much of the tinkering that has gone on with the UCO over the last few years. It appears to have been designed to assist with the economic challenges arising from Covid-19 but also feeds into the Government's current 'build, build, build' philosophy.

What is a use classes order?

The UCO governs the designated uses of land and property throughout England. This is a tool enabling councils to control the mix of uses in a particular area, such as the high street of a local town, and to identify which kinds of development are suitable for each of the local places classified in their local plans.

Are the use classes set in stone?

A degree of flexibility is embedded by allowing changes within a use class, and some changes between use classes. Under the current UCO, permitted changes can be revoked by a council for specific areas and reasons by an "Article 4 Direction" (for instance restricting the right to convert offices into residential in some parts of London).  Permitted changes of use do not include external works to buildings, which still requires planning consent, and some are subject to a prior approval mechanism on matters such as (in the context of conversion to residential use) transport and highways, noise and contamination.

What does the new UCO look like?

The Town and Country Planning Act (Use Classes) (Amendment) (England) Regulations 2020 (No. 757) (the "Regulations") apply to the use of whole or a part of a building and will:

  • Revoke Classes A1 (retail), A2 (professional services), A3 (restaurants) B1 (Business), D1 (non-residential institutions) and D2 (Assembly and Leisure)

  • Create a new Class E (Commercial, Business and Service) incorporating A1, A2, A3 and B1 uses and some D1 (medical, creche and day-care), and D2 (indoor sport, recreation and fitness uses).

  • Create a new Class F1 (Learning and non-residential institutions) education establishments, galleries, museums, libraries, law courts and buildings used as public halls, or connected with places of worship.

  • Create a new Class F2 (Local Community) shop selling essential goods to the local community (subject to size and distance from other shops), outdoor sport and recreation facilities and indoor pools and rinks.

  • Remove some uses from the UCO's remit, so that they become sui generis and therefore require planning consent for any change of use. This includes pubs and drinking establishments with expanded floor provision; hot food takeaway for hot food consumed off-premises; live music venues, cinemas, concert, bingo and dance halls. This may protect local pubs from too easily being converted into residential properties, for example.

Class C (residential) and Classes B2 (general industrial) and B8 (storage and distribution) remain unchanged.

What will the new UCO mean for existing buildings?

The Regulations come into force on 1 September 2020 and, on that date, any property currently being used for any of the revoked use classes will immediately be reclassified as Class E, F1 or F2 as appropriate. In each case, therefore, they will benefit from the wider permitted changes of use.

Where a planning condition specifically excludes any change from an existing use to other uses within the same class and/or other permitted changes of use, this will continue to limit the use of the property to its specified use within its new use class. Where there is no such condition, then the property automatically benefits from the new permitted changes offered by the new classes.

Councils will be unlikely to be permitted to adopt a blanket approach to revoking new permitted changes by an Article 4 Direction as this contradicts the clear intention of the legislation (hence the concerns raised by the curtailing of the right to convert offices to flats in some areas of London). However, they may seek to control the mix of uses in a particular area by the use of planning conditions attached to new consents granted from now on, that either specify specific changes within the relevant new use class which will be permitted, or by identifying those which a building will not be permitted to change to. For example, out of town retail units may be restricted from changing within Class E to what are traditional 'town centre' uses, and vice versa, in order to maintain the desired protection and mix within town centres.

Restrictions on use are also embedded in s.106 agreements, for example, on the range of goods that can be sold by out of town retail units. Changes of use under permitted development rights do not involve a new planning permission or automatically revoke or disapply an existing s.106 agreement. Therefore, a change of use may breach the terms of a s.106 agreement. Such an agreement would need to be varied or formally revoked. 

What will the new UCO mean for leases?

An unfettered ability to change the use of a property is also curtailed by restrictions within leases. Where the permitted use is defined in a lease quite specifically, such as a 'retail shop within Class A1', then a change to any other use within the new Class E would be a breach of the lease. If the wording of the permitted use is more open, such as 'any use within Class A1', then arguably, it may be possible for the tenant to change to any other Class E use.

Where landlords must consent to changes of use, there may be a question as to whether they are acting reasonably by not consenting to a change of use within Class E. This will depend on the exact wording used in each leases.

Where planning consent is required for external works in order to facilitate permitted changes of use, the terms of the lease will often require the tenant to obtain the landlord's consent before applying for planning consent, or at least to notify the landlord of the planning application, and in addition will often require the tenant to obtain the landlord's consent to the alterations.

How will current planning applications be impacted by the new UCO?

Current applications which have not yet been decided and have been made with descriptions of development referencing the existing use classes are to be considered and determined by reference to these use classes. Additional consideration of restrictive conditions may be required.

Permitted development consisting of works (as distinct from changes of use) such as internal alterations, limited extensions and other minor works are set out in the Town and Country Planning (General Permitted Development) Order 2015. There are detailed conditions and restrictions identified for each of the current use classes. The Regulations state that these permitted development rights applicable to a property which is, for example, currently Class A1 and becomes Class E will relate to the existing use of the property at the time that the works are done. For example, a retail shop within Class E will benefit from the permitted development rights applicable to a Class A1 use. This situation will apply until 31 July 2021 when new revised permitted development rights are to be introduced.  Current Article 4 Directions will also continue to apply as now until 31 July 2021. New planning practice guidance will be published prior to 1 September 2020.

Is the new UCO a permanent change?

The Explanatory Memorandum published alongside the Regulations cites the necessity to stimulate recovery from the impact of Coronavirus, but it also refers to the need to revitalise the High Street by allowing flexible and new emerging uses that will "make these areas viable now and in the future" and that the reforms are aimed at "allowing business greater freedom to change to a broader range of compatible uses which communities expect to find on modern high streets", both of which statements imply a longer term application of these new use classes.

However, these Regulations sit alongside the existing UCO (as amended) and there are no current plans to consolidate them, which gives the appearance of a shorter lifetime for the flexible uses, and the perpetuation of a more cumbersome legislative landscape than the streamlining objective suggests.

The Regulations were passed very quickly and without full consultation. Proposals for reforming the UCO in 2019 considered new retail models to incorporate a diversity of ancillary uses, but the economic impact of Coronavirus has overridden these smaller scale changes in light of the "pressing need to support town centres".  Many of the changes will prove both controversial and confusing, so it is likely that they will need to be revisited in the near future, if only for clarification or amendment following any retrospective consultation measures.

It also leaves open to questions the issue of whether existing local plans by which councils allocate land for development will be considered to be out of date because of the Regulations. They may wish to restrict some areas of certain kinds of Class E uses (along the lines of the existing UCO classification) in order to maintain closer control on development. However, this seems counter to the intention of the Regulations which is to allow freedom and flexibility. It may, of course, cease to be an issue if the Regulations do not apply for more than an interim period (e.g. 12 to 18 months).

Finally, Government proposals emerging in August 2020 focus on a possible new simplified zoning system for development, classified into Growth, Renewal and Protected areas within which permission in principle, or restriction on development (as appropriate) apply. The permission in principle within the Growth and Renewal zones may conflict with the scope offered by wide ranging use classes in the Regulations. Permission in principle is generally quite closely circumscribed such that a council can be confident that development brought forward under a local development order, for example, will be limited to a controlled mix and range of uses. This opposes the broad flexibility of Class E which, in the domain of permission in principle, could lead to uncontrolled and unbalanced new development. A zoning system may have to restrict the flexibility in the new use classes, in order to control the kind of development coming forward.

Conclusion

These changes to the Use Classes Order are substantial and immediate. They are likely to be welcomed by developers wanting to take advantage of flexibility to navigate challenging economic times and changing needs of the High Street. Landlords may need to take care how they affect value of their portfolios. However, it remains to be seen how these will interdigitate with other emerging planning proposals also designed to stimulate development as part of the economy.

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