New commercial property classifications

2020 has been a challenging year for many of us, with radical measures, extreme changes and a brand-new way of life that we’ve all had to adjust to. The United Kingdom is a dynamic country in more ways than one, always evolving and adapting in various ways. One thing that is constantly changing is our consumer and occupier habits, and environments need to keep pace with these changes, especially when it comes to property needs.

Changes to the Use Classes Order

As of 1 September 2020, the government implemented a radical reshape of the Use Classes Order, a planning system that has been in place for several years. The new system is to encourage increased flexibility in the hope of supporting the recovery of high streets and towns which have been further affected by the pandemic.

Essentially, we now have the ability to change uses within towns across England without obtaining planning permissions. This can be done under the new Class E ‘Commercial Business and Service’, thus revoking Classes A1, A2, A3, B1, D1 and D2 completely. The new Class E covers a wide range of businesses including retail, financial and professional services, cafés and restaurants, offices, research and development and light industrial, clinics, health centres and nurseries and indoor sport and recreation.

While it might appear that changes are happening to every establishment on the high street, buildings excluded from the new Class E include cinemas and bingo halls, hot food takeaways and drinking establishments. This is to protect uses with community value or those with negative potential externalities; these now fall within Sui Generis, and still require planning permission for change of use.

What are the benefits of the new commercial property classifications?

While it’s hard to decipher the benefits of the new Class E classifications until they’re fully underway, it remains clear that landlords and, to a certain extent, tenants will now be able to keep pace with the evolving retail and leisure market.

Landlords of redundant retail properties will be able to review what the most valuable use of their building will be and be involved in the process of repurposing it for an alternative business.

Additionally, landlords will be able to market their new businesses across multiple sectors, thus increasing the pool of potential tenants. This new legislation has somewhat forced the influence of local authorities to take a backseat. Councils previously had a significant say in the built environment, but Class E has given that power to the people, allowing businesses to adapt and diversify to meet changing demands.

New commercial property classifications mean it’s out with the old and in with the new. The previous commercial property classifications were put in place in 1987 so many believe it’s time for a change. The flexibility of Class E ‘Commercial Business and Service’ not only reduces timescales and building barriers, it provides towns across England with a system that supports commercial fluidity which should, as a result, allow businesses to respond better to our rapidly changing consumer needs.