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Commercial forms of development – Updated for the ‘E’ generation

Depending on which paper you read either the commercial development sector is gaining traction! Partly due to the Government’s programme of prior approval the commercial sector has seen a number of buildings being converted to residential with no substantive drop off in need.

Or

The commercial development sector is on its knees with increasing vacancy caused by the retail and commercial office sectors moving to an online base.

Both views may be true however discussing this with one commercial agent he described that the commercial office sector was incredibly competitive at the moment with viable options for short term and long term space in short supply. Before you ask that conversation was before 2020 became the year it was!

So with this in mind my article this time around is with a commercial focus, the issues and options surrounding commercial planning in England (remembering Wales, Scotland and Northern Ireland have their planning systems taken on a use-class by use-class basis.

Retail, Commercial and Business Development

Before 2020 I would have said that retail should not be ignored. Now in 2021 I am of the view that Retail is a prime development source. Not only do you have some fantastic onward permitted development allowances for residential spaces (with more to come) but the new Class E has shaken control of the high street to its very core stripping planning policies away and making the change of use within Class E not development at all!.

Class E Shops, Financial and Professional Services, Restaurants and Cafe’s, Offices, Research and Development, Light Industrial, Medical or health services, as a crêche, day nursery or day centre, gymnasium or area for other indoor sports or recreations.

Uses within Class E have taken a massive hit in recent months with more and more reports of shop closures and the death of the high street.

Smaller retailers however are seeing a resurgence with smaller shops able to afford smaller rents but with a much more focused (non-internet) clientele. Where you have a bigger shop (say an old BHS or similar) S55 of the Town and Country Planning Act makes clear that the sub-division of a large shop to smaller units is not development requiring planning permission. A small consent may be needed if your adding doors to the shopfronts or advertising.

Class E uses can go to any other use within Class E without any form of planning permission at all.

Sui-Generis – Drinking Establishments

Public houses and drinking establishments have taken a bit of a nosedive and (annoyingly) are protected as Community Assets under the national planning policy framework. Further, if the local residents choose they can request an Asset of Community Value status be put on the property which will definitely prevent development coming forward.

There are no permitted development allowances available to release a drinking establishment use so in reality you need to be able to run the pub or justify its loss. Most planning policies provide for a years worth of marketing before the pub can be changed to another use by a planning permission.

Sui-Generis – Hot Food Takeaway

Part of the Hospitality industry that has seen a resurgence as more of us opt for an app rather than cooking at home. Takeaways tend to have ongoing issues relating to noise, disturbance and opening house after dark and at times when residents should be sleeping.

New Takeaways need a planning permission because of their outward effects and as such you should focus these submissions on town centres or where there is existing late night noise and activity.

Business Uses (B2 and B8)

The business uses are best located in commercial centres or within designated industrial areas. Each of the uses has individual challenges or needs and as such need to be taken on a site by site basis.

Class B2 General Industrial

General Industrial Uses are only acceptable in areas that have been identified within the Local Plan as suitable for employment and are away from residential uses. General Industrial Uses present the threat of significant noise, disturbance and pollution that have impact in terms of ongoing uses.

You need planning permission for all Class B2 uses and it is suggested that these are only explored with end users in mind

Class B8 Storage and Distribution

The Storage Uses within Class B8 suit larger warehouses that are very cost effective to build and have a market demand as more and more business move from conventional shops to online presence. A large number of such developments are built at major road interchanges, in industrial spaces and behind shops and retail centres to serve compatible forms of development.

Warehouses are often built speculatively as there are onward changes of use under Class I to Office.

New warehouses require planning permission and some indication of the end uses.

Hospitality and Residential Institutions

Given the focus of this article I am purposefully avoiding Classes C3 and C4 as these are wholly residential so instead I will focus my attention on Classes C1 and C2/C2(a)

Class C1 – Hotels, Guesthouses and Halls of Residence

Running a hotel is a lifestyle choice and not a job, it is a very active form of development that needs the end developer to heavily systemise or staff up!

That being said these uses can ba a tremendous commercial property investment if your model supports it.

Class C1 uses are not ‘dwellings’ in the sense that they need to comply with National Floorspace Standards or standards for HMO’s, Further they resolve the question of ‘what is serviced accommodation’ as they comply with the requirements of the ‘90 Day London Rule’ within the Greater London Council (General Powers) Act 1973.

Hotels in particular make great conversions to SA and in the main do not require planning permission if you are not seeking to alter the exterior and can maintain the maximum stay to under 90 days.

Halls of Residence are the exception within Class C1 as they are purpose built letting units normally for students. Halls are used by Council’s (Portsmouth and Southampton running hot on this) to resolve their HMO problem as (in theory) a big hall of say 100 rooms could potentially restore upto 20 HMO’s back to houses. That is of course not the case as we all know that HMO’s are not just occupied by students!

Like hotels halls of residence are not subject to the national standards as they are not dwellings and as such you can propose an arrangement that maximises the internal space of the building. Further, with even the most modest Hall of residence space costing upwards of £100.00 per week per student a 100 bedspace hall of residence is a good onward use.

You can get to Hall from a Hotel because there is no change of use and so old hotels in student towns are a great onward investment.

Class C2 Residential Institutions

Use for the provision of residential accommodation and care to people in need of care (other than a use within class C3 (dwelling houses), use as a hospital or nursing home and use as a residential school, college or training centre. Don’t seem the most obvious investment however Care Homes in particular have seen a resurgence given our aging population and need for end of life care.
Whilst it may be a morbid subject the likes of McCarthy and Stone made a revenue of 660.9 million GBP in 2017 and employ 2,145 people and so the model itself is very profitable for those able to operate within it.

Like Class C1 these buildings require planning permission from the Local Planning Authority however unlike Class C1 they count towards the Council’s housing stock.

Most Council’s seek to promote Class C2 Care Homes and seek to protect them when there is a vacant Class C2 unit within their area of control. Hence when seeking to remove a Class C2 use you need to be able to prove that the use is no longer needed.

The Telegraph (https://www.telegraph.co.uk/money/consumer-affairs/531-955-per-week-map-care-costs-across-england/) helpfully published a list of figures for the weekly cost of living in a care home in 2017 with the headline figures being between £531 to £955 per week!

Class C2(a) – Secure Residential Institutions

Defined as ‘Use for the provision of secure residential accommodation, including use as a prison, young offenders institution, detention centre, secure training centre, custody centre, short-term holding centre, secure hospital, secure local authority accommodation or use as military barracks’ It is unlikely that a reader of YPN would knowingly want to build a building for (to quote James May) ‘catching crims and locking them up in your community!

However

Class C2(a) uses are previously developed land and are normally located in the middle of the countryside and where you have a substantial sequence of buildings that find themselves with an exemption under countryside policies:

  1. Planning policies and decisions should avoid the development of isolated homes in
    the countryside unless one or more of the following circumstances apply:

b) the development would represent the optimal viable use of a heritage asset or
would be appropriate enabling development to secure the future of heritage
assets;

If its Listed

c) the development would re-use redundant or disused buildings and enhance its
immediate setting;

If its not!
The Government has a great search engine to look for Government Property for sale at https://e-pims.cabinetoffice.gov.uk/government-property-finder/SearchForSale.aspx so have a look and see what is possible.

The ‘F’ Classes

These are the ‘community benefit uses’ the one that a community needs to function and that are (in the main) protected by the NPPF or other interest groups such as Sport England.

Class F1 – Non-residential institutions

The Use Classes Order gives the following examples:
for the provision of education,
for the display of works of art (otherwise than for sale or hire),
as a museum,
as a public library or public reading room,
as a public hall or exhibition hall,
for, or in connection with, public worship or religious instruction,
as a law court.

Whilst not prescribed as such all of these uses are otherwise compatible with dwellings and with retail or town centres.

Some of these uses would not be appropriate for a developer (law courts and the like and best left for Local Government)

Some of the above uses do make fantastic residential conversions through a planning permission (no permitted development here) as long as you’re able to prove that the building is no longer needed by the community at large.

Class F2 – Local Community Uses

Defined as:

Use as —
a small shop (less than 280sqm and where there is no other shop within 1km)
a community hall
a swimming bath or skating rink

‘Sui-Generis’

A latin term meaning of its (his, her, their) own kind; in a class by itself describes uses that do not fall neatly within a prescribed use class or that the Government seeks to require planning permission for by removing the use from a Class and placing it in the sui-generis ‘Bin’.

Often known as the ‘non-social’ uses sui-generis includes:

Large HMO’s
Casino’s
Betting Shops

You always need planning permission to go to a sui-generis use however:

Class C – retail, betting office or pay day loan shop or casino to restaurant or cafe
Class E – financial and professional or betting office or pay day loan shop to shops
Class F – betting offices or pay day loan shops to financial and professional
Class G – retail or betting office or pay day loan shop to mixed use
Class H – mixed use to retail
Class J – retail or betting office or pay day loan shop to assembly and leisure
Class K – casinos to assembly and leisure
Class N – specified sui generis uses to dwellinghouses

Of part 3 of schedule 2 of the GPDO 2015 all allow for the conversion out of a sui-generis use.

Agriculture

The allowances for agricultural buildings go way beyond the provisions within Class Q and there are two seperate allowances that give ongoing rights to get agricultural buildings into a business use:

Class R – agricultural buildings to a flexible commercial use

Development consisting of a change of use of a building and any land within its curtilage from a
use as an agricultural building to a flexible use falling within Class A1 (shops), Class A2
(financial and professional services), Class A3 (restaurants and cafes), Class B1 (business), Class B8 (storage or distribution), Class C1 (hotels) or Class D2 (assembly and leisure) of the Schedule to the Use Classes Order.

And

Class S – agricultural buildings to state-funded school or registered nursery
Development consisting of a change of use of a building and any land within its curtilage from a
use as an agricultural building to use as a state-funded school or a registered nursery.

The important thing to remember with the provisions of Class R is that they do not give you a clean use class as para R(2)(b) states: (b) for the purposes of the Use Classes Order and this Order, after a site has changed use under Class R the site is to be treated as having a sui generis use and therefore you cannot expect to gain any further change of use under this provision.

However the benefits of the individual uses set out above are clear and this does then create an interesting non-conforming use in the Countryside!

Some FAQ’s not covered above

Q: What about converting business premises from one use to another, eg, office to restaurant/food outlet

A; Now covered by Class E

Q: if you have a commercial tenant such as Costa or a chain like that, who should get the right planning consent? The business or the landlord?

A; The duty to ensure that the building falls within the correct use is the Landlord/Owner. That being said most chains now have planning teams or consultants who handle this for the chain and the landlord.

Q; is there a difference between out-of-town and town centre classifications?

A; Town Centre and Out-Of-Town Centre locations are defined by the Local Plan. Within Town centre locations commercial development is encouraged for the normal ‘Town Centre Uses’ which are defined by the Council’s policy.

Q; when could a residential building become a commercial?

A; Most council’s actively resist the loss of residential units where the site is not in a town centre location. Within town centres you can look at residential above commercial if you want or need to lose a poor commercial use.

Q: What is the importance of understanding the primary/secondary/etc area “classifications” within town centres.

A; Primary and secondary are terms used to define the importance of a designated town centre. In reality they are all designated however the expectation is that the primary will be occupied by larger retailers and users and the secondary will be used by the smaller providers.

Q: does an area targeted for regeneration have an impact on planning applications?

A: Yes because the council will have a policy or be developing a policy to focus the regeneration effort. Therefore one must discuss the matter with the LPA.

by Jon McDermott