Permitted Use

Whilst negotiating the terms of a lease, the Landlord and the Tenant agree on how the commercial premise(s) would be used.

It is essential from a tenant’s perspective, that planning advice is sought, especially if planning permission is required.

The above also applies to any potential freehold purchaser. From a commercial point, typically a landlord will negotiate the limit the Use of the premise, for instance limiting to aspects of a Class i.e. ‘places of work only’, instead of allowing the Class as a whole i.e. ‘Class B’.

Nevertheless, below are essential information and points for a landlord or a tenant to consider prior to agreeing to the use of the proposed premises.

Planning Use Classes determine what a property may be used for by its lawful applicants. Before leasing or buying a property for your business, you should always check on whether you need to obtain planning permission or prior approval for its intended use.

On 1 September 2020, new regulations implementing major reform of the use classes planning system for land and buildings across England came into force.

What were the original Use Classes?

The Use Classes Order 1987 provides the structure for grouping different uses of land and buildings into ‘classes’, within which a change of use does not require the grant of planning permission and by reference to which landlords can manage the use of their assets by their tenants and occupiers. The previous system generally operated with the following four main use classes each with their own subclasses:

• Class A – retail, food and drink, financial and professional services
• Class B – offices, industry and places of work
• Class C – homes and residences
• Class D – leisure, assembly and institutions.

What are the changes to the Use Classes Order?

The new regulations are intended to amend and simplify the old use classes system to allow businesses to react quickly to any economic challenges, although there is some complexity in the detail of the changes that have been introduced. They essentially revoke the previous Use Classes A1-A5, B1, D1 and D2, and introduce changes and replacements as follows:

• Creation of a new Class E for “Commercial, Business and Service” use, which brings together a very comprehensive mix of uses – the previous shops (A1), financial and professional services (A2), restaurants and cafes (A3) and offices (B1), gyms, nurseries and health centres (D1 and D2) and other suitable town centre uses. Importantly, properties can now change to other uses within the new Class E without the need for planning permission (unless they are subject to other specific planning controls) as this would no longer equate to “development”.
• Creation of new Class F1 (“Learning and Non-residential Institutions”) which incorporates former D1 uses (non-residential institutions) which involve buildings which are regularly in wider public use such as schools, libraries and art galleries.
• Creation of new Class F2 (“Local Community”) which will group together uses from former Class D2 covering activities of a more physical nature such as swimming, skating rinks and areas of outdoor sports, in addition to use of buildings principally by the local community. In creating this new class, the government has sought to recognise the importance of – and protect from Class E use changes – small, local shops servicing the shopping needs of local communities, particularly in rural communities, large residential estates and outside main shopping areas.
• Removal of former Class A4 (drinking establishments), Class A5 (hot food takeaway) and Class D2 (assembly and leisure) – with the result that these uses all now fall within the ‘sui generis’ category, outside of the formal use classes structure, and will be subject to a full planning process before a material change is implemented.

Dealing with tenant applications to change use

Landlords will need to look closely at their leases in terms of processes and obligations around a tenant’s right to change the use of the premises. It is common for a tenant to be able to do this, subject to obtaining the landlord’s prior consent (and compliance with any other statutory or contractual requirements to enable the use proposed) and regard to the particular definition of the permitted use.

If a lease does allow for change of use with consent then, unless there is also an express requirement for the landlord not to unreasonably withhold that consent, the landlord has discretion in making their decision (i.e. there is no implied statutory requirement for the landlord to act reasonably). If the landlord is required by the lease to act reasonably when considering a tenant’s application, and wishes to refuse the grant of consent, this will require detailed consideration and dialogue with the tenant in terms of the legitimate rationale for withholding consent.