Changes to the planning system in September 2020 altered the way that property can be used, opening up new possibilities for both landlords and tenants and enabling some veterinary practices to use a far wider range of property than before.
As a result of the changes, the Town and Country Planning (Use Classes) (Amendment) (England) Regulations 2020 has introduced a new regime.
The previous individual Use Classes:
- B1 (Offices, research and development, industrial processes)
- A1-A3 (Shops, financial and professional, services, food and drink)
- D1 (Clinics, health centres, creches, day nurseries)
- D2 (Indoor sport, recreation or fitness)
have been replaced with a single Use Class E: Commercial, service and business class. Previously, veterinary activities were depending on their nature, either classed as Use Class D1 or “sui generis”, a Latin phrase meaning ‘their own kind or in a class by itself’.
What do these changes mean in practice?
For landlords it means if their property used by vets, which was previously classed as Use Class D1 , it can now be used by an array of businesses within Use Class E and will not be limited to veterinary services unless there are express planning conditions limiting the use.
This will have two effects – it will increase the commercial valuation of the property, which can now be tenanted by a range of businesses and service providers, increasing its attractiveness as a rental or purchase proposition.
It will also mean that any rental valuations and appraisals for new or existing occupational interests would see a rise in value, to reflect the landlord’s ability to let the property easily to a wider market.
Conversely, property owners who had invested to achieve a desirable use change to attract specific clientele will no longer have an upper hand in the market.
As a matter of caution, a landlord should seek to expressly limit the extent of the permitted use within the lease documentation where they are granting interests in land, as the planning system will no longer deter tenants who want to change the use during their contract. The risk is that the property could be used for a purpose for which it may not be fit, or which has not been envisaged by its owner.
For vet tenants, the changes may open up a wider range of properties and locations in the correct use class. Moreover, a tenant may, during the term of their contract, decide they want to change their location, for example to scale up or down – they would therefore need to assign their interest to another, and the changes make that property suitable for a far wider market, making that process easier.
Tenants may, however, find they are offered less favourable lease/occupational terms from landlords who know their property is now attractive to a wider market; they may therefore be less inclined to grant longer leases, and could increase the frequency of rent reviews, for instance.
For those looking to start a veterinary practice who own existing buildings in any of the use classes mentioned above (provided the use is actual and lawful), those may not require planning permission for change of use to use to a veterinary practice, cutting overheads in the creation of a new business by using existing assets.
The overall fluidity within the use class and permitted development rights is a clear incentive to maximise the use of existing buildings and assets, including repurposing buildings on the high street and in town centres which are vacant or unused. This allows buildings to be used for mixed uses at different times of the day without the need to involve local planning authorities. It should be noted that all applications which were lodged before 1 September 2020 will be treated under the old regime and use classes.