45.As explained in Chapter 2, new use class E brings together certain uses commonly found on high streets that were previously in different use classes. According to the planning White Paper, its purpose is “to make it easier for businesses to change use without the need for planning permission to support our high streets and town centres bounce back following the covid-19 pandemic.” The Government argues that changing consumer behaviour, such as the shift to online shopping, which has been accelerated by the covid-19 pandemic, has particularly affected high streets and town centres and that the new use class will support them in “adapting to these changes” and becoming “thriving hubs where people live, shop, use services, and spend their leisure time.”
46.The evidence was broadly supportive of new use class E. James Wickham from the London Property Alliance welcomed the changes to make the planning system “more responsive and flexible” and said the new use class had “broadly been a positive change”. The ATCM agreed it would allow high streets to adapt and that “more flexibility around commercial uses” was “pragmatic” and described it as an example of how permitted development could play a “constructive role in the planning system”. London First said “the flexibility afforded by class E for landlords to respond to changing market conditions, and quickly switch between different commercial uses without the need for planning permission, will play an important role in managing vacancy levels”. The IPM said it was “very evident that existing use classes in town centres were becoming increasingly irrelevant” and so welcomed “much about the new class E”. Clifford, Ferm, Livingstone and Canelas agreed that “greater freedom to change use between different commercial uses (including retail) could have benefits for business”.
47.Some of the evidence was concerned, however, about the potential for large out-of-town gyms and office blocks to be converted into retail units and so bypass the sequential test. According to the NPPF, LPAs should apply a sequential test to planning applications for main town centre uses to ensure that wherever possible they are located in town centres. Out-of-centre sites should be considered only if suitable sites are not available there or on the edge of the centre. Rachel Blake from the LGA said, given “how difficult life has been for high street businesses and high street retail”, losing the sequential test and “the ability to test the impact on local services” would be “a real mistake”. Ian Fletcher, Director of Policy at the BPF, cautioned against anything that undermined the sequential test. According to the London Forum of Amenity and Civic Societies, use class E contradicts the NPPF and the town centre first principle, as there will be no way for LPAs to prevent such conversions. The IPM said it could “take more retailers…away from the high street unless conditions can be placed on out of centre development”. Tesco, which warned of a “significant adverse impact on town centres”, thought it perhaps an “unintended consequence” and suggested that the use classes order be amended to require planning permission for such out-of-centre changes of use.
48.When asked about this, the Minister first repeated that the Government was looking at the planning system “in the round” and wanted it to be “more predictable, speedy and outcome-based”. He also seemed to imply that the three areas proposal in the White Paper could help LPAs protect “out-of-town business premises”. When it was suggested that permitted development would bypass those protections, the Minister started talking about homes, saying the PDR changes would bring forward “overwhelmingly brownfield sites for a variety of tenures”. When reminded that the question was about change of use to retail, he mentioned prior approval and the 1,500 sq m floorspace limit, both limitations on the class MA right, not change of use within use class E. At no point did he respond specifically to the point about out-of-town retail.
49.In oral evidence, several witnesses also expressed concern about the possible loss of medical centres as a result of their inclusion in the new use class. When asked if he accepted this criticism, the Minister said, “No, I do not” and called it “a misunderstanding of the proposals”. He said it had been included to make it easier for other uses to change to medical centres. He then explained that medical centres were protected under the prior approval process for the class MA right, even though the question had been about change of use within the new use class. Subsequently, in a letter to the Chair of our Committee, the Minister repeated his point about the prior approval process and said the suggestion made to the Committee that medical centres might not be protected was “quite wrong”. The letter did not acknowledge that the question had been about the loss of medical centres through change of use within use class E.
50.We broadly welcome the new use class E, as we can see the advantages of greater flexibility, but it should not permit development to bypass the sequential test or risk the loss of medical centres. As we have already recommended, the Government should review the role of permitted development rights within the planning system. As part of that review, we recommend it consider amending the use class regime to prevent out-of-town commercial and business premises from being converted to retail without having first gone through the sequential test and to prevent the loss of medical centres through change of use within the new use class E.
51.As discussed, the new class MA right permits any use class E premises to convert to residential use. The objective is to increase the supply of new housing on brownfield sites and boost footfall on high streets and town centres. It was acknowledged in evidence that changing consumer habits, dating back many years but accelerated by the pandemic, had resulted in an oversupply of retail floorspace on the high street. According to the BRC, even before the pandemic, there was an estimated oversupply of 20% across the UK, although consequent on this will be some increased demand for logistics and warehouse space. It was acknowledged that the amount of surplus retail floorspace would only increase and that some of it should therefore convert to housing. The DCN acknowledged “the role to play for retail to convert to residential in some instances, in line with shifting economic trends”.
52.Clifford, Ferm, Livingstone and Canelas said there had been “some positive reuse of vacant and under-occupied commercial space through conversion to residential”. As Policy Exchange explained, permitted development can help to prevent retail and office space from staying derelict for long periods. Mark Worringham from Reading Council said encouraging people to come back to live in town centres was “a fundamental part” of Reading Council’s planning policy but that it could be done, and had long been done, through the full planning application process. Ian Fletcher from the BPF also supported residential development in town centres but said it should be done through the planning system.
53.London YIMBY and PricedOut said the changes would “allow local areas to respond dynamically and help to prevent the death of high streets by bringing new footfall into the area” and that businesses “require footfall, which requires people”. It continued:
PDR allows property owners to convert their properties to the most in-demand form of use; whether that is a different commercial use, or residential use. In the case of high streets with empty commercial properties, converting some to residential uses would not only provide much-needed homes, it would increase footfall in the area and support other shops and commercial uses, maintaining the viability of high streets and helping move towards the concept of a “15-minute city”.
54.The majority of submissions argued strongly, however, that the new right would not increase footfall overall or revitalise high streets and town centres. Tim Frost, a chartered surveyor, said the new PDR betrayed “a complete lack of understanding as to how badly some town centres will be damaged by adopting a one-size-fits-all policy nationwide”. The Highgate Society said the Government were “grievously mistaken”. The LGA said the Government had provided no evidence that PDR would “achieve their intended goal to support business and stimulate a sustainable economic recovery and/or growth” and that it was a hasty response to declining footfall. The ATCM, which supported the new use class, described the new PDR as “a blunt instrument” that would “undermine the viability of town centres”.
55.Many feared the new right could result in landlords forcing out viable businesses that would themselves have attracted more footfall than the residential units that replaced them. Crucial to this point is the condition that a property have been vacant for at least three continuous months before the new right applies. Much of the evidence argued that three months was not long enough to protect viable businesses. London Councils said it risked “a disruptive free-for-all, with short-term financial considerations deciding the future use of vacant high street buildings, damaging the fabric and coherence of our town centres”. The ATCM said the three-month rule was insufficient and that the new right would “create a licence for the eviction of businesses in favour of residential”. Ojay McDonald, its CEO, said three months would “not be long enough” as when property owners “think about the value of their asset, they are thinking…decades down the line”, and that they could easily “bear the pain of a property that is empty three months before they are able to flip it to housing”.
56.The IPM agreed it would be too easy to force out tenants and that there should be a test to prove that a property had been “legitimately” vacant for three months. Matthew Davis, Head of Membership at the IPM, said the three-month rule was “a particular concern” and that it was “one thing having a premises vacant and neglected for a decade” but “quite another thing for it to be vacant for just three months”. He also said the IPM was “hearing stories” from its members of landlords “looking to position” themselves and “bringing leases to an end prematurely”. Dr Clifford from the Bartlett School of Planning said the three-month rule could be “easily circumvented” and that landlords could “artificially create a vacancy”.
57.This was a particular concern in areas with higher house prices, such as the south and London, where, as the ACS put it, commercial property “often becomes more valuable when converted to domestic use. In these areas, landlords and developers will have a particular incentive, even where a property is not vacant, to force out businesses and wait for three months. London First agreed that, although the new right was “intended to address surplus vacant commercial properties”, the higher value attached to housing could create the “unintended consequence” that “viable businesses are ousted in favour of a residential conversion” as the three-month vacancy rule was not enough to dissuade “unscrupulous landlords” from forcing out viable businesses.
58.As Mark Worringham from Reading Council explained, the argument that residential conversions bring people back into town centres and so increase footfall only holds if the premises are no longer viable as successful businesses. Permitted development might bring “some people into the town centre, but it probably results in the loss of an awful lot more people who would have come to use those facilities.” Similarly, James Wickham from the London Property Alliance explained that many of the uses that now sit in class E, and which are therefore caught by the new class MA right, are precisely the uses that make town centres attractive places to visit. The BRC, a mouthpiece of the retail sector, concluded:
Unplanned conversion of high street uses to residential therefore risks making the remaining commercial units less viable as fewer shoppers will be willing to walk to them. While this will be somewhat offset by the footfall generated by the occupants of the new homes, it is unlikely to be enough to fully compensate for the impact of the conversion.
59.Also on the question of footfall, Matthew Davis from the IPM said:
One of the fundamental areas of disagreement we have with the proposals is the assumption that randomly introduced housing on a high street will lead to some kind of growth in footfall or economically for the area. We just do not see that. There are well acknowledged concepts borne out by examples across the country where you start to break up that agglomeration of activity in town centres, it breaks up that experience and you get a spiral in the wrong direction.
60.We were told that if town centres and high streets were to survive and thrive, commercial activity needed to be concentrated in the centre, through a process of agglomeration, and ground-floor premises in particular needed to be retained. We were also told, however, that permitted development threatened the integrity of this core area of business activity. London First said that “allowing the market to pepper-pot housing on an ad hoc basis in high streets and town centres that are already struggling will break up active frontages and further dilute their vibrancy and commercial success.” The London Borough of Islington said the new right would result in “evictions and vacancies” and reduce the “economic benefits of agglomeration”. The BRC said it risked “creating commercial locations that are less concentrated, less compact, and less navigable by customers than if high street uses were contiguous” and that customers were “less likely to walk past dispersed and ‘gap toothed’ shopping locations than ones where shops are in a row”.
61.James Wickham from the London Property Alliance warned that the new class MA right could result in “pepper-potting of residential…across a wide swathe of city centre locations”. Mark Worringham from Reading Council said there was “definitely a distinction between people living over the shops and “converting the ground floor into residential”, as the new class MA right would allow, and “eating away at and hollowing out high streets.” Ian Fletcher from the BPF told us high streets needed “unbroken retail frontage” but that PDRs tended “to cut across that”. Norwich City Council, Norwich BID and VisitNorwich, and the ATCM said the focus should be on converting upper-floor premises to residential use. The Kensington Society thought change of use to residential at ground-floor level was “not likely to have a large take-up.”
62.We support the Government’s aim of revitalising our high streets and town centres, but we are concerned that the new class MA right could undermine attempts to do so. The current requirement that properties need only have been vacant from three months could put viable businesses at risk of being evicted by landlords seeking a profit from residential conversions. This resulting loss of businesses could have a negative effect on footfall. As we heard repeatedly, a viable business will attract more footfall than a residential conversion. We cannot see how footfall will be boosted if high street shops, which serve local workers and visitors, are replaced by flats. That being said, we acknowledge that there may be merit in converting upper floors of properties on the high street. We are also concerned that the protection for ground-floor premises in the prior approval process applies only in conservation areas.
63.The Government should either extend the vacancy period or devise a test that can be applied to properties to make sure they are not still viable as class E premises. It should consider the most appropriate vacancy period or test as part of the review of PDRs for change of use to residential. We also recommend the Government amend the prior approval process for the class MA right so that councils, in deciding whether to approve development, can consider the impact of a loss of ground-floor commercial, business and service use on the sustainability of a town centre or high street.
113 , p. 68
114 Ministry of Housing, Communities and Local Government, , para 3
115 [James Wickham]; London First (); Association of Town and City Management (); Institute of Place Management (); ACS (The Association of Convenience Stores) (); Norwich BID, VisitNorwich (); London Property Alliance ()
117 Association of Town and City Management ()
118 London First ();
119 Institute of Place Management ()
120 Dr Ben Clifford (Associate Professor in Spatial Planning and Government at The Bartlett School of Planning, University College London (UCL)); Dr Jess Ferm (Associate Professor in Planning and Urban Management at The Bartlett School of Planning, University College London (UCL)); Dr Nicola Livingstone (Associate Professor in Real Estate at The Bartlett School of Planning, University College London (UCL)); Dr Patricia Canelas (Departmental Lecturer in Sustainable Urban Development at University of Oxford) ()
121 Institute of Place Management (); London Forum of Amenity and Civic Societies (); Tesco (); [Rachel Blake, Mark Worringham]; [James Wickham, Ian Fletcher]; [Dr Clifford, Sarah Bevan]
122 Ministry of Housing, Communities and Local Government, , para 86
125 London Forum of Amenity and Civic Societies ()
126 Institute of Place Management ()
127 Tesco ()
129 [Mark Worringham]; [Sarah Bevan, Dr Clifford]
132 British Retail Consortium ()
133 District Councils’ Network (); Clifford, Ferm, Livingstone and Canelas ()
134 District Councils’ Network ()
135 Clifford, Ferm, Livingstone and Canelas ()
136 Policy Exchange ()
139 London YIMBY, PricedOut ()
140 British Retail Consortium (); Local Government Association (); Association of Town and City Management (); London First (); Reading Borough Council (); Town and Country Planning Association (); Dolphin Living (); The Highgate Society (); London Property Alliance (); District Councils’ Network (); Tim Frost (); Royal Town Planning Institute (); London Councils ()
141 Tim Frost ()
142 The Highgate Society ()
143 Local Government Association ()
144 Association of Town and City Management ()
145 ; [Mark Worringham]; [James Wickham]; [Matthew Davis]
146 London Councils (); Association of Town and City Management (); Institute of Place Management (); London First (); Reading Borough Council (); Sevenoaks District Council ()
147 London Councils ()
148 Association of Town and City Management ()
150 Institute of Place Management ()
153 ACS (The Association of Convenience Stores) (); Association of Town and City Management (); London Property Alliance (); London First (); ACS (The Association of Convenience Stores) (); [James Wickham]; London Councils (); Mayor of London ()
154 London First ()
157 British Retail Consortium ()
159 [James Wickham]; [Ian Fletcher]; London First (); Institute of Place Management (); Historic England (); London Forum of Amenity and Civic Societies (); Levitt Bernstein (); District Councils’ Network ();
160 London First ()
161 London Borough of Islington ()
162 British Retail Consortium ()
166 Norwich BID, VisitNorwich (); Association of Town and City Management (); [Ojay McDonald]
167 Kensington Society ()