PROPERTY JOURNAL

Should retail be converted to new uses?

The traditional model of the British high street seems no longer sustainable. Could conversion of retail units under permitted development rights be part of the solution?

Author: John Dean

11 January 2020

The October 2019 collapse of Thomas Cook is a recent example of what some have termed a retail apocalypse. The last few years bear testament to the enormous challenges facing the sector, which have resulted in the substantial diminution and in some cases the demise of many household names.   

Woolworths and House of Fraser have largely been confined to the history books; Debenhams Arcadia and Monsoon have all fallen prey to insolvency processes. In July 2019 William Hill announced that it was closing down 700 betting shops and Ladbrokes Coral the UKs largest bookmaker is expected to shut around 1000 outlets. Public houses are disappearing from towns and appearing en masse in the auction room and high-street banks with the notable exception of Metro are closing their doors to the public. Even retailers with a healthier balance sheet are feeling the pinch: Marks & Spencer is anticipating closing 100 stores and Boots plans to shut 200 of its smaller pharmacies. Busy streets even in affluent areas now resemble ghost towns. Is it high noon for the high street?

The rise of more convenient internet shopping is undoubtedly a significant factor in this malaise. Internet retailers also have fewer resource requirements and do not have to pay rents and business rates on premises in expensive locations.

Out-of-town shopping centres such as Westfield in London Bluewater in Kent and the Intu MetroCentre in Gateshead pose another threat. Their rise in popularity particularly among younger generations might be attributed to the way they combine retail with leisure entertainment a place to eat drink socialise have a facial or even to work. With free wi-fi and the increase in availability and reliability of mobile data extras once considered optional or extravagant are now often taken as a given. The popular click-and-collect technology pioneered by Walmart shows that the internet and traditional retail need not be mutually exclusive.

The popular click-and-collect technology pioneered by Walmart shows that the internet and traditional retail need not be mutually exclusive

Likewise it is no coincidence that there has been a significant increase in the number of coffee shops which have managed to thrive in the high street and beyond unlike other types of outlet. We go to coffee shops to meet work relax and surf the internet with coffee drinking itself often being only a secondary purpose.

The indicators appear therefore to suggest that to succeed on the high street may be a result of using space effectively for community purposes embracing technology for work pleasure and day-to-day transactions and ensuring this is achieved in convivial surroundings that encourage people to leave their homes. The question then is how to achieve this. Is the current planning regime sufficiently flexible to enable retail spaces to be adapted for multipurpose community activity without undue difficulty?

The primary legislation for planning is the Town and Country Planning Act 1990. Section 57(1) requires planning permission to be obtained to carry out any development on land. Development is defined in section 55(1) as including ‚the making of any material change in the use of any buildings or other land with materiality being a question of fact and degree in each case. The different classes of use are defined in the Town and Country Planning (Use Classes) Order 1987 (as amended).

Certain changes of use are deemed to be acceptable without requiring specific planning permission and these are listed in Part 3 of Schedule 2 of the Town and Country Planning (General Permitted Development) (England) Order 2015. These permitted development rights are useful to developers in redeveloping retail space into alternative uses attractive to the 21st-century customer albeit only to a limited extent and subject to qualifications and exceptions. For example permitted development rights are usually excluded in conservation areas following the implementation of a direction under article 4 (1) of the 2015 Order.

The relaxation in planning legislation following government consultation in 2012 which in many places enables a conversion from class A1 retail under the 1987 Order to C3 residential dwelling  has been widely publicised. The ability of investorowners to obtain higher yields from residential properties has been alluring but perhaps more widely seen in the context of a transfer from B1(a) office use. Although the high street has not experienced so much residential development some schemes are now appearing; but whether they will be successful remains to be seen given the residential markets current difficulties.

Developments that are likely to succeed on the high street and beyond include communal spaces health and fitness facilities and areas where people can meet break bread and drink together; in other words these will be residential schemes that include some commercial retail or leisure element. Such mixed-use sites however fall outside the limited scope of current permitted development rights and will almost invariably require planning permission for the works required if not for change of use.

Developers need to work with landowners to ensure that covenants and planning conditions are sufficiently flexible. In Dunnett Investments Ltd v Secretary of State for Communities and Local Government and another [2016] EWHC 534 (Admin) the High Court held that a planning condition that land should be used for class B1 use ‚and for no other purpose whatsoever without express planning consent from the local planning authority first being obtained meant exactly that and that deemed planning permission under a General Permitted Development Order did not suffice.

At present permitted development rights apply subject to limitations and exceptions to the conversion of class A1 retail into:

  • class A3, restaurants and cafes
  • class A2, financial and professional services
  • class D2, assembly and leisure
  • offices in class B1(a).

Conspicuous by their absence are any permitted rights to change from A1 retail to class A4 drinking establishments or A5 hot food takeaways or class D1 which in its subsections includes schools day centres art galleries places of worship and health centres and clinics. The fundamental purpose of these uses is to bring people together in one way or another and they can be combined quite effectively under one roof or a parade; the Intu MetroCentre for example is one of the few shopping centres in Europe to have its own resident full-time chaplain. Reform that extends permitted development to include some of these uses would be a welcome solution to high street woes.

Such community-focused uses are to be encouraged not least because the clear evidence is that they reflect what the public wants. Planning legislation should support and not hinder implementation and while central and local government will wish to retain a degree of control over zoning and redevelopment they should not be blind to the difficulties facing the high street. They should look to streamline planning processes and perhaps consider extending permitted development rights further to promote the regeneration of the high street and local communities.

jdean@mccarthydenning.com

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