Upcoming changes to commercial property

There are a couple of significant changes in the world of commercial property which will be taking place on the 1st September 2020. The first of the these being the introduction of a new use class classification amending the use classifications under the town and country planning (Use Classes) Order . Amongst other things the changes will introduce a new use class E ‘Commercial, Business and Service’ which will effectively combine the current commercial use classes covering shops and offices into a single use class. The second major change is the introduction of a new surveyors (RICS) code for Leases introducing mandatory requirements for surveyors when negotiating the terms of leases.

By amending the use classes order the government is attempting to simplify the planning structure, reducing the need to apply for change of use consent when the use of a property goes from one form of commercial use to another. Use class E will replace the old use classes A1, A2, A3,B1,D1 & D2 and a number of other commercial uses. It will also allow buildings which are used for multiple commercial purposes to be included within the same use class. The object of the changes being to make the whole use planning structure easier for people to understand and to save the need for consent to changes in use being required where for example a shop is converted into an office or where a building currently used for light industrial work is converted into a gym.

As well as other changes a new use class F has been created which will be known as ‘community and learning’. Class F1 will include schools, museums, libraries and places of worship whilst class F2 will include community halls and outdoor sports facilities.

Introducing a mandatory lease code the RICS is attempting to balance the negotiating position of the parties by enforcing open and fair negotiation between the landlord and the tenant. A written set of heads of terms will need to be given to both parties setting out the agreed terms of the lease and where a tenant is unrepresented the terms of the code will need to explained to them and the Landlords surveyor will need to recommend that they obtain representation.

Additional requirements to deal with uninsured risks as well as insured risks reflects the current trend towards covering every situation insured or uninsured where the property may be damaged. Also making tenant break rights in the lease conditional only on the rent being up to date and vacant possession being given on the break reflects the current case law on break rights.

If you have any queries or issues regarding a commercial lease or you need further information on the changes then please contact Anna Austin on 01935 846214 or anna.austin@battens.co.uk or a member of the Battens commercial property team.