E = C3

Or, The Theory Of Residential-Rather-Than-Retail-Activity.

MHCLG’s consultation paper Supporting housing delivery and public service infrastructure (3 December 2020, consultation deadline 28 January 2021) sets out various proposed new permitted development rights, but, in what has been a disastrous week for traditional retail chains, guess which proposal has attracted the most attention?

The new class E was introduced into the Use Classes Order in July 2020 (see my 24 July 2020 blog post E Is For Economy) and took effect from 1 September 2020, forming a new, amalgamated commercial, business and service use class that includes the old A1 (with small exceptions), A2, A3, B1, some D1 and some D2).

It was always anticipated that new permitted development rights would be subsequently introduced that allowed changes from the new class E without the need for planning permission. At the moment, until 31 July 2021 the existing permitted development rights apply to whatever the relevant use would have been categorised as before class E was introduced.

But in updating the existing development rights so that they apply to the new class E from 1 August 2021, the Government now intends to allow significantly greater freedoms.

“It is proposed that the right would allow for the change of use from any use, or mix of uses, within the Commercial, Business and Service use class (Class E – see paragraph 12 above) to residential use (C3). The right would replace the current rights for the change of use from office to residential (Part 3, Class O of Schedule 2 to the General Permitted Development Order), and from retail etc to residential (Part 3, Class M of the General Permitted Development Order) which remain in force until 31 July 2021. (See also Part 3 of this consultation document in respect of consequential changes.) It will go significantly beyond existing rights, allowing for restaurants, indoor sports, and creches etc to benefit from the change use to residential under permitted development rights for the first time. The protections in respect of pubs, including those with an expanded food offer, theatres, and live music venues, all of which are outside of this use class, continue to apply and a full planning application is always required for the change of use to or from such uses.

The Commercial, Business and Service use class applies everywhere in all cases, not just on the high street or in town centres. In order to benefit from the right premises must have been in the Commercial, Business and Service use class on 1 September 2020 when the new use classes came into effect.”

So, there will for the first time be the right to convert restaurants, indoor sports centres, creches and so on to residential use.

But the radical part of the proposal is that there should be no size limit on the scale of the conversions allowed:

“Building on the delivery success of the permitted development right for the change of use from office to residential, it is proposed that there be no size limit on the buildings that can benefit from the right. The right would allow for the building, or part of the building, to change use, rather than lying vacant for example. It is recognised that some retail and office buildings in particular could be a substantial size, and therefore result in a significant number of new homes, the impacts of which would be managed through prior approvals. Permitted development rights do not apply to development that is screened as requiring an Environmental Impact Assessment.”

Whilst there is currently no size limit for conversion of offices, for retail and light industrial the limits are currently small (150 sq m and 500 sq m respectively). The new right would enable change of use of the very largest shops and light industrial buildings to residential, subject to similar prior approval requirements as presently apply. Whilst permitted development rights do not apply to development that would require environmental impact assessment, it will surely be very rare that the conversion of a building, however large, would require environmental impact assessment.

How better, it might be thought, both to find new uses for surplus floorspace and to add to housing stock? But of course such a right is going to have a huge effect on the real estate market and could itself help to accelerate the loss of retail where greater value can be extracted by residential conversion.

Unlike with most permitted development rights, this right would also apply in conservation areas. “However, in recognition of the conservation value that retail frontage can bring to conservation areas the right would allow for prior approval of the impact of the loss of the ground floor use to residential.”

These are proposed to be the necessary prior approvals:

“Similar to other permitted development rights for the change of use to residential:

• flooding, to ensure residential development does not take place in areas of high flood risk

• transport, particularly to ensure safe site access

• contamination, to ensure residential development does not take place on contaminated land, or in contaminated buildings, which will endanger the health of future residents

• To ensure appropriate living conditions for residents:

• the impacts of noise from existing commercial premises on the intended occupiers of the development

• the provision of adequate natural light in all habitable rooms

• fire safety, to ensure consideration and plans to mitigate risk to residents from fire

• To ensure new homes are in suitable locations:

• the impact on the intended occupiers from the introduction of residential use in an area the authority considers is important for heavy industry and waste management”

The usual concerns about the permitted development process remain, but now writ large, for instance:

⁃ How can the Government continue to justify not imposing on these permitted development schemes the requirements that would be applied by way of the section 106 planning obligations process to schemes that come forward by way of traditional planning application? Why no affordable housing requirements, or contributions to schools and other social infrastructure, and how is this fair for those developers struggling to deliver traditional projects in the face of policy requirements that permitted development schemes neatly sidestep?

⁃ How will associated applications for planning permission for external works to these buildings be dealt with? Coping with the fenestration, M&E and external aesthetic requirements arising from conversion of an office building is one thing, but imagine the challenges faced by the developer of a department store, supermarket or light industrial unit. And what of its curtilage? What principles should an authority adopt in determining such an application, so that adequate controls are maintained without making the right meaningless by giving the authority a de facto veto?

⁃ Aside from increasing their use of article 4 directions, how can authorities prevent the conversion of buildings in plainly unsustainable locations?

⁃ How can an authority influence its area by way of its development plan policies, when the authority is left with so little control?

⁃ To what extent will the use of the new right be stymied by conditions on existing permissions, disapplying the benefit of the General Permitted Development Order, or indeed Use Classes Order?

As it happens we are co-hosting a webinar with Landmark Chambers to answer questions such as these – and plenty of others that delegates have been sending in. Landmark’s Zack Simons will join Meeta Kaur, Victoria McKeegan and myself at 5.30 pm on 15 December, free registration here: https://us02web.zoom.us/webinar/register/WN_4SVkbXSeRsm6QJ9aDRBBDA .

Simon Ricketts, 4 December 2020

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E Is For Economy

It’s the economy, stupid.”

More E words: the English planning and property community was immediately, depending who you spoke to, exercised/excited by the changes to the Use Classes Order and General Permitted Development Order this week. Surprisingly so perhaps, given how heavily the changes had previously been trailed (although, it must be said, in terms of the Use Classes Order changes, not consulted upon). Inevitably and by contrast, the wider public appears to be oblivious as to what lies ahead, despite the potentially far-reaching implications of the creation of the new “commercial, business and serviceclass E within the Use Classes Order in particular.

There are many good summaries already of the changes. My Town colleagues Nikita Sellers, George Morton Jack and Meeta Kaur have prepared a detailed summary.

I am not going to consider the rights and wrongs of the changes in any detail. I have referred previously to my disappointment that the Government has not required for example its nationally described minimum space standards to be applied in relation to the creation of new dwellings by way of permitted development rights (despite having published, with curious timing, a report Research into the quality standard of homes delivered through change of use permitted development rights, on the same day as publishing legislation which does not take into account the recommendations of that work, with no explanation for the discrepancy). The Use Classes Order changes do provide some overdue flexibility given the structural changes underway in our town centres in the light of changed shopping patterns (not just Covid-related but of course now accentuated), but they are extremely wide ranging and I query whether the various permutations of potential consequences have been adequately considered. But that is all for another day.

Instead, I wanted to pull us back to some planning law fundamentals – in what circumstances may owners find that they cannot rely on the expanded use rights after all?

First, in order to move within a use class, the initial use first has to have been instituted, so if for instance you have an as yet unimplemented planning permission for a shop, or if the development has been built but not yet been occupied, the development will first need to have been used as a shop before there can be a change to another use within the new class E (e.g. offices).

Secondly, there must not be a condition on the planning permission authorising the current use that has the effect of preventing use changes that would otherwise have been enabled by way of the Use Classes Order and/or General Permitted Development Order. This is familiar but not straightforward territory. There is much case law as to whether particular phrases in conditions actually achieved what the local planning authority intended and indeed whether the benefit of the condition was lost through the grant of subsequent permissions which did not expressly impose it.

The general answer is that it depends on a careful analysis of the existing planning permission (and of course any provisions within any section 106 agreement).

The Supreme Court considered a situation like this in London Borough of Lambeth v Secretary of State (Supreme Court, 3 July 2019), which I summarised in my 4 July 2019 blog post What Really Is The Meaning Of Lambeth?

The original permission read:

The retail unit hereby permitted shall be used for the retailing of goods for DIY home and garden improvements and car maintenance, building materials and builders’ merchants goods and for no other purpose (including any other purpose in Class I of the Schedule to the Town and Country Planning (Use Classes) Order 1972 or in any provision equivalent to that Class in any statutory instrument revoking and re-enacting that Order).”

It was then amended to read:

The retail use hereby permitted shall be used for the retailing of DIY home and garden improvements and car maintenance, building materials and builders merchants goods, carpets and floor coverings, furniture, furnishings, electrical goods, automobile products, camping equipment, cycles, pet and pet products, office supplies and for no other purpose (including the retail sale of food and drink or any other purpose in Class A1 of the Schedule to the Town and Country Planning (Use Classes) Order 1987 (as amended) or in any provision equivalent to that Class in any statutory instrument revoking and re-enacting that Order).”

The council then approved by way of section 73 a further change so that it was to read:

The retail unit hereby permitted shall be used for the sale and display of non-food goods only and, notwithstanding the provisions of the Town and Country Planning (General Permitted Development) Order 1995 (or any Order revoking and re-enacting that Order with or without modification), for no other goods.

However, the council neglected to include that wording in a condition. It was simply part of the description of the development.

The Supreme Court held that the permission was to be interpreted as constraining the use of the retail unit so that it was for the sale of non-food goods only. But for our purposes, this is an example that the courts (1) routinely treat conditions as able validly to restrict the operation of the Use Classes Order and/or General Permitted Development Order and (2) are perhaps currently more benevolent towards the local planning authority’s position than has previously been the case where there has been procedural imprecision, as long as what was intended was clear.

My 14 October 2017 blog post Flawed Drafting: Interpreting Planning Permissions referred to another recent example, Dunnett Investments Limited v Secretary of State (Court of Appeal, 29 March 2017) which concerned this condition:

This use of this building shall be for purposes falling within Class B1 (Business) as defined in the Town and Country Planning (Use Classes) Order 1987, and for no other purpose whatsoever, without express planning consent from the Local Planning Authority first being obtained“.

The court held that “express planning consent” did not include prior approval pursuant to the “office to residential” permitted development right. The restriction applied.

So care is needed! Where there are restrictive conditions which would restrict the flexibility that the new class E would otherwise give, of course consideration can be given to applying to remove those conditions by way of section 73 application.

Thirdly, when applications for planning permission are now to be determined, careful consideration will need to be given to the proposed description of development and no doubt there will be issues arising as to whether decision makers are justified in imposing conditions which restrict the operation of the new Use Classes Order and General Permitted Development Order flexibilities. It will be the B1(a), (b) and (c) arguments all over again, but writ large.

I hope that we will have updated Planning Practice Guidance. In the meantime, the current Planning Practice Guidance has passages such as these:

“It is important to ensure that conditions are tailored to tackle specific problems, rather than standardised or used to impose broad unnecessary controls.

1. necessary;

2. relevant to planning;

3. relevant to the development to be permitted;

4. enforceable;

5. precise; and

6. reasonable in all other respects.”

“Is it appropriate to use conditions to restrict the future use of permitted development rights or changes of use?

Conditions restricting the future use of permitted development rights or changes of use may not pass the test of reasonableness or necessity. The scope of such conditions needs to be precisely defined, by reference to the relevant provisions in the Town and Country Planning (General Permitted Development) (England) Order 2015, so that it is clear exactly which rights have been limited or withdrawn.Area-wide or blanket removal of freedoms to carry out small scale domestic and non-domestic alterations that would otherwise not require an application for planning permission are unlikely to meet the tests of reasonableness and necessity. The local planning authority also has powers under article 4 of the Town and Country Planning (General Permitted Development) (England) Order 2015 to enable them to withdraw permitted development rights across a defined area, where justified.

Will that guidance be sufficient to avoid disputes? I doubt it.

Am I entitled to apply for planning permission simply for Class E use? Given that Parliament now deems changes within class E not be material, why not? How will such applications be determined as against development plan policies which are likely to be at odds with such an approach, and how will CIL be calculated, given that many CIL charging schedules distinguish as between, for instance, retail and office use?

Fourthly, planning permission will still be required for operational works that materially affect the external appearance of the building. To what extent will local planning authorities seek to exert control by that route, as we have sometimes seen with office to residential conversions? How to guard against plainly substandard conversions of shops to offices and of, for instance, units on out of town business parks to shops?

Fifthly, there is going to be much focus on how precisely the General Permitted Development Order operates in relation to the new class. For an initial period, until 31 July 2021, the GPDO will operate as against how the relevant use was categorised before the changes to the Use Classes Order became effective. Are we to expect further changes to the GPDO in the coming period?

Sixthly, quite apart from these planning law constraints, private law constraints imposed by way of, for instance, restrictive covenants and user covenants in leases will still apply.

But, there’s no way round it, class E has huge implications for much of the world around us, from central business district to market town, to out of town retail or business park. It also brings with it, and this is its very point, huge opportunities to allow for adaptation and for entrepreneurship. How is all this going to work out in practice? Will people start using the new freedoms and then find that inevitably in due course the rules tighten again, by which time the horse has bolted, or, that for land owners, they may have unwittingly lost the right to the use which was most valuable in investment terms? E is also for experiment.

Simon Ricketts, 24 July 2020 (expanded version 25 July 2020)

PS and for Emily! Happy birthday daughter.

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