The appearance of Leeds city centre is forever changing. Over the past few years, the UK Government has made far-reaching changes to the Town and Country Planning (Use Classes) Order 1987, most recently with the creation of the new, overarching Use Class E.
To tenants, this changing regulatory landscape can open up the possibility of expansion or diversification, but to landlords and tenants alike, it presents real risks across lease covenants, service charge apportionments, and, most importantly, the future of security of tenure under the Landlord and Tenant Act 1954.
At Kaiser Solicitors, we appreciate that the legal document that governs a small business’s operation has to be a future-facing tool, not a thing from the past.
The Advent of Class E: A Planning Game-Changer:
What Class E Encompasses:
The new Class E is a wide, composite use class that efficiently rolls up a huge range of typical commercial uses which are formerly divided into distinct use classes, thus necessitating formal planning consent for a switch between them.
The new class mainly brings together:
Old Class A1: Shops, retail units, showrooms.
Old Class A2: Professional and financial services (banks, estate agents).
Old Class A3: Restaurants and cafes (crucially, minus takeaways).
Former Class B1: Offices, research and development, and light industrial activities.
Former Class D1/D2: Clinics, health centres, creches, and gyms.
The Power of Interchangeability:
The general principle of Class E is that a property can switch its use within this class without being required to make an application for planning permission from Leeds City Council. For instance, an empty office unit (previously B1) can now be reused as a gym (previously D2) or a shop (previously A1) without a planning application.
The Commercial Lease: The Landlord’s Contractual Counter-Attack:
The commercial lease is the document that is above the planning law. Although planning law permits change of use within Class E, the lease itself will nearly always have a user covenant that limits contractually the tenant’s use.
The Interaction with Security of Tenure: The 1954 Act:
The changes in planning also subtly but significantly impact the most important piece of UK commercial property law: the Landlord and Tenant Act 1954, Part II. The Act gives qualifying business tenants statutory security of tenure in that it entitles them to renew their lease at the expiration of the term.
Conclusion:
The planning changes, spearheaded by the arrival of Use Class E, are one of the most dramatic governmental incursions into the commercial property market for many years. Leeds small businesses need to realize that the lease is the dominant document, and a permissive planning regime does not supplant a restrictive contractual covenant.
If you are a small business tenant or commercial landlord in Leeds and need advice on reviewing or drafting your commercial lease, the property law experts at Kaiser Solicitors are here to help. Contact us now and get individualised, practical legal advice to protect your commercial interests.
