In October 2018, the Government released proposals addressing the difficulties facing Britain’s high streets and the need for more housing. The ‘Planning Reform’ consultation suggests modifications to current permitted development rights and to the Town and Country Planning (Use Classes) Order 1987 (‘the Use Classes Order’).
The consultation is open until 14 January 2019 and can be found here.
But what would these changes mean for commercial property investors and landlords?
Key changes proposed: Permitted Development Rights
Permitted development (“PD”) rights are a form of planning permission which broadly allow for certain changes of use and building works to be carried out without the need to apply for planning permission. The consultation proposes new PD rights and further changes of use which will not require planning permission. Specifically, a right for shops (A1), financial and professional services (A2), and hot food takeaways (A5) to change to office use (B1) without the need for permission to be granted has been proposed. A right for hot food takeaways (A5) to change to residential use (C3) has also been proposed. The rationale behind this is given as the need to generate further diversity and footfall on the high street in order to respond to its diminishing popularity.
The Government has also outlined a new PD right to build up and above existing buildings, up to a maximum of five storeys high from ground level to create additional residential units. However, this will still be subject to prior approval by a local planning authority. It is envisioned that this additional PD right would promote the development of residential housing over retail and office buildings in an effort to utilise air space.
Key changes proposed: The Use Classes Order
One of the key changes put forward in relation to the Use Classes Order is the modification of the current right for a premises to exercise a temporary change of use from shops (A1), financial and professional services (A2), restaurants and cafés (A3), hot food takeaways (A5), offices (B1) certain non-residential institutions (D1) and assembly and leisure uses (D2) to shops, financial and professional services, restaurants and cafés or offices for up to two years. The government has proposed extending this period to three years, in order to allow business owners to ‘test the waters’ of a new use type for longer. Within this time, there would be a right to allow premises to change to certain community uses for example a public library or museum, without the need to apply for planning permission.
Potential impact of the proposals
When considering the proposed changes, the Government has acknowledged the obvious pressures faced by high street occupiers and owners in the wake of internet shopping and other factors and how retailers are struggling to adapt to these pressures.
However, it remains to be seen if the proposed changes to PD rights and use classes promote the revival of the high street, or instead further encourage its demise by allowing for more shops to be changed to offices or other temporary uses. Although landlords will likely welcome the additional flexibility in extending the temporary change of use to three years, which could assist in mitigating business rates liability for example, a number of temporary fixes could be detrimental to the future of the high street.
Proposed changes to the Use Classes Order may lead to greater uncertainty for landlords when granting a lease of their premises. Under the proposed regime, even a carefully drafted lease might inadvertently allow for the change of use of premises between classes of very different types, which may not be in the landlord’s interests. Clear drafting will be necessary to ensure that landlord consent must be obtained to move between these uses, if the government receives a positive response from the consultation and decides to introduce the proposed changes.