Real Estate Tip of the Week - New Use Class E: The Change and the Challenge

Published 23 septiembre 2020

From 1 September 2020 a new Use Class E (introduced via the Town and Country Planning (Use Classes) (Amendments) (England) Regulations 2020 No. 757) replaced the following use classes:

• Class A1 - shops;
• Class A2 - financial and professional services;
• Class A3 - restaurants and cafes; and
• Class B1 - business,

as well as incorporating nurseries, health centres and gyms.

As a result, land or buildings utilised for the above uses don’t need to obtain planning permission for changes within this new Use Class E. This marks a radical departure from the current system, whilst simultaneously reflecting the current need for commercial flexibility.

Such rapid change has already sparked a legal challenge to suspend the operation of, and ultimately quash, this statutory development. Holgate J ordered the matter be heard by the High Court between 8 - 15 October (listed for a one and half day hearing), the speed of which highlights the need for a decision on this issue. In the meantime, there is uncertainty as to the longevity of this new Use Class E, not to mention a lack of clarity regarding the unintended long-term consequences if this new use class does remain intact.

Drafting considerations – leases and permitted users

Given that a wider permitted use of a property could significantly impact the ability of landlords to control the uses of their buildings and also could affect future rent reviews, this uncertainty raises concerns regarding how the permitted user is drafted in leases.

At this stage, different approaches to permitted user drafting includes:

• referring to the relevant use class order as it existed at 31 August 2020;
• using generic language without specific reference to use class orders; and/or
• referring to a limited list of alternative uses (for example permitted with consent), excluded uses and/or changes of use (still using generic language without specific reference to use class orders).

We are here to assist if you have any drafting concerns. In the meantime, keep an eye out for our update once judgement has been given on the legal challenge.