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Robert Irving Burns

Major Changes to Commercial Property Classes

September 28, 2020    |   Robert Irving Burns

The UK’s business environment has changed beyond recognition in recent years. As such, companies are increasingly having to evolve in order to survive. The long-established commercial classification system was restrictive – something that frequently frustrated businesses of all types.

Now, the commercial classes have been overhauled, providing companies with far more flexibility. Here’s further information.

What’s changed?

The old classification system was familiar to everyone. For example, in order to change the purpose of an A1 to another class, the landlord / building owner would usually have to apply for planning permission – a time-consuming and sometimes costly process.

The government has now introduced the following changes:

  • Class A and Class D has now been completely removed. The same applies to some of Class B.
  • New Classes have been introduced to replace them. These are: Class E, Class F.1 and Class F.2.

The new classifications – a brief overview

Class E

Class E covers commercial, business and service buildings. Essentially, this is one large class, incorporating what was previously A1, A2, A3, B1, plus parts of D1 and D2.

Class E covers a huge range of business types, such as retail premises, professional and financial services, cafes and restaurants, nurseries, creches, health facilities, gyms and sports premises, offices, plus light industrial buildings.

Class F.1

Class F.1 covers ‘learning and non-residential institutions’. This includes libraries, museums, galleries, religious buildings, courts, and public halls.

Class F.2

Buildings classified as F.2 are those that benefit the local community. Examples are: outdoor sports venues, skating rinks, convenience stores (of a certain size), and swimming pools.

What do the changes mean for businesses?

If you wish to change the use of your building, you can now do so without applying for planning permission, providing it’s in the same class. For example, that means that an office can now be changed to a gym without planning permission, or a nursery to a shop.

This is welcome news if your premise falls into one of the new categories, as it means you’ll enjoy far greater flexibility in the future. If you’re a landlord, it means you can better support your commercial tenants, and adapt more easily to their changing needs.

Other benefits

The new classification system offers other advantages too. For example:

  • It’s now easier to adapt to a changing environment. For example, if the area your shop is in is no longer regarded as a prime retail location, you could change the building’s use to make the premises more profitable.
  • It’s more appealing to buyers and tenants. If you’re selling or leasing your building, it’ll appeal to a much wider demographic. For example, someone wishing to open a restaurant may be more likely to consider your premises now, even if it’s currently being used for financial services.
  • There’s no limit to the changes. Building use can be changed multiple times, which allows for profitable evolution over time.
  • It speeds up the process. In the past, changing the class of a commercial building usually took around eight to 12 weeks. Now, the process can happen in a fraction of the time.

FAQs about the changes

If you’re uncertain about how the changes will affect you, here are a few commonly asked questions, and their answers.

Are there any exemptions (from the original classification system)?

There are a few exemptions, but these are largely predictable. For example, the following types of premise are not included in Class E:

  • Hot food takeaways (previously A5)
  • Drinking establishments (previously A4)
  • Cinemas (previously D2)
  • Bingo halls (previously D2)

Instead, they’ve been moved to ‘Sui Generis’, which means they’ll still require planning permission to change their use.

Why have some premises been made exempt?

Some of the building types are regarded as offering value to a community. For example, if there’s only one cinema in the area, it would be detrimental to local residents if the cinema was transformed into another type of business.

What will be the impact of the changes?

It’s early days, and difficult to predict exactly how this will affect commercial property as a whole. However, it’s likely that we will see fewer vacant buildings, given that they can now be more easily used for different purposes. This gives commercial property investors a lot more flexibility, but only time will tell if it serves its desired purpose.

Are there any drawbacks?

One potential issue is ‘over-abundance’ of a particular type of business. For example, one possible scenario is a high street being filled with restaurants and cafes, but seriously lacking in retailers. However, it’s likely that businesses will change class use in accordance to market demand – so if an area wants a diverse mix of shops, restaurants and offices, commercial property owners will supply it.

There are some concerns that a few sectors may be unable to afford Class E property, if they’re placed in direct competition with other industries. Whether this becomes an issue or not remains to be seen.

What about if I want to change the use of the building from one Class to another?

As before, you’ll have to obtain planning permission to do so. If you don’t get the right planning permission, you could be issued a hefty fine.

What about the GPDO (General Permitted Development Order)?

The changes to the classes will not be applied to the GPDO until 31st July, 2021.


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