Keeping it ‘Class E’ in London
1 September 2020
Over the past six months, we have had to alter how we work, shop and socialise and for many of us, particularly those who live and work in London, some elements of this altered state will be permanent or continue for some time to come. It is therefore no surprise that the Government’s proposed changes to the planning system are riding the wake of change, with radical proposals to overhaul the planning system at a strategic level as well as drip feeding more immediate changes to permitted development rights and the Use Classes Order to help the planning system transition. For our latest comment on these changes, click here.
From today, planning permission will no longer be required to move between retail, professional services, restaurants/cafes, offices (including research and development facilities and light industrial uses), clinics, health centres, creches, day nurseries, day centres, gyms, and most indoor recreation facilities. Previously these were all separate use classes but now all fall within the new Class E. Where we have adapted to new ways of living and working, the aim of Class E is to do the same for buildings, allowing flexibility for change, particularly on the high street and within local centres. But with this increased flexibility, how will the central London boroughs respond?
Whilst some organised opposition to Class E has been seen, including an unsuccessful high court challenge to deem the changes unlawful, this has not been local authority led. Logically, the strongest resistance is likely to come from those boroughs that have long sought to protect their employment and retail floorspace. At first glance, the impact of Class E on the global retail and commercial centres within Westminster, the City of London and Kensington and Chelsea could be profound.
With over 1.6 million m2 of retail floorspace in Westminster alone, the flexibility provided by Class E, combined with the general decline in demand for retail floorspace, has the potential to change the character of the area significantly. Westminster’s planning policies have long sought to protect its international retail reputation and the introduction of Class E could immediately erode this. Will the likes of Knightsbridge, Bond Street and Regent Street remain globally recognised shopping destinations and home to the major fashion houses and department stores? Or will other uses such as offices, gyms and creches pop up in these locations with operators seeking to raise their profile by securing an internationally recognised address; ultimately undermining the retail exclusivity of these destinations?
We anticipate that certain central London boroughs will seek to use planning conditions to restrict movements within Class E to control unwanted non-retail commercial uses. However, this will only be possible where new permissions are sought and by then significant change may have already taken place. Very few existing permissions are likely to contain restrictive conditions controlling the changes now allowed by Class E. Equally, whereas Councils could remove office to residential permitted development rights through the use of Article 4 directions, this route will not be possible in relation to changes within Class E; as the movement does not constitute development.
Accordingly, it may be up to the landowners (including the Great Estates) to protect central London’s prestigious world-renowned streets and the premium rents they have historically commanded. Will the landowners and institutional investors seek to maintain control over changes within Class E by introducing more restrictive use clauses in leases? Or will they embrace the flexibility provided by Class E to ensure lower vacancy rates as the nature of shopping and working practices respond to COVID-19 and increased reliance on the internet? Locations controlled by a single landowner, or landlords with large dispersed portfolios, are more likely to make strategic decisions in order to continue to present a coherent offer, whereas the approach may vary considerably in locations where there is no dominant landowner.
Central London’s continued status as a global commercial and financial hub is vital for the success of the UK economy. Following the introduction of Class E, existing office floorspace which does not have an historic planning condition restricting its use to office floorspace only, can also be converted to any of the other uses within Class E without planning permission.
As of 31 March 2020, there was more than 5.3 million m2 of office floorspace in Westminster and 5.6 million m2 in the City of London. Undoubtedly the COVID-19 pandemic will leave vacancies in the London office market, particularly within secondary stock, but with so much of this floorspace being above ground floor level, the question remains as to whether Class E will realistically erode the supply of office floorspace in the capital when so many of the other Class E uses prefer a ground floor frontage. The General Permitted Development Order (GPDO) will not be updated until August 2021 and until then, the use classes which preceded Class E will apply for changes to or from other use classes via permitted development rights. When the GPDO is updated, it will be interesting to see whether Class E is able to transfer to Class C3 residential use and, if so, what the prior approval ‘tests’ might be. What we can be sure of however, is that the West End and City of London will want to maintain London’s position as the financial capital of Europe and will seek to influence Government decisions that introduce significantly greater flexibility.
In outer London boroughs, the response may be quite different, with some authorities welcoming Class E. In Croydon for example, whilst the Local Plan seeks to protect existing retail floorspace, the Council has largely allowed applications for flexible commercial ground floor uses outside its designated town centres. This provides flexibility in new developments that are trying to establish commercial tenants in local centres and parades. Class E will mean that this principle applies in town centres as well. Croydon’s town centre has been largely vacated in anticipation of the potential future arrival of Westfield for which planning permission has been granted but not yet implemented. In the short term, Class E could bring some activity back to the town centre with commercial uses no longer having to comply with Croydon’s town centre policies.
London’s boroughs will also have to consider how the changes will impact out of town retail; whilst the ‘big box’ uses (such as large food stores and DIY stores) are unlikely to experience rapid change, as other Class E uses do not generally have the same floorspace requirements, smaller retail warehouse units could be lost to gyms, play centres, leisure uses and restaurants.
For Councils such as Harrow which had been preparing internal guidance on how best to determine changes of use to try and reinvigorate its high streets following the pandemic, this will now be redundant following the introduction of Class E. Equally, the borough’s place making policies, which included a non-retail threshold limits in district centres, allowing the authority to influence the pace of change, are equally moribund. With so many changes afoot, it seems that local authority ‘place making’ strategies may be more difficult to formulate with the real power for change being driven by the market.
Whilst town centre policies in London have always varied from borough to borough, the introduction of Class E will result in changes to the character and appearance of shopping areas and town centres which reflect local market conditions. In a time where we have all had to embrace change, let’s hope that London’s response to the new order is a ‘Class E’ and positive one; creating a greater diversity of uses where they are missing, allowing flexibility where it is needed and somehow protecting the attractiveness of our global retail destinations; all hopefully to the benefit of the wider economy.
For further information on the changes, or to speak to one of our Planning & Development professionals, please click here.
