On 1 September 2020, changes were made to the Town and Country Planning (Use Classes) Order by the creation of a new “E” class, designed to create greater flexibility for commercial premises. Nearly 2 and half years on from the changes, Rob Greenwood, looks at the knock-on effect that this has had on property values, and more specifically the value of veterinary practices.
The amendments to the Use Classes altered the way that property can be used, opening up new possibilities for both landlords and tenants and enabling some veterinary practices to use a far wider range of property than they previously had.
The previous individual Use Classes were replaced with a single Use Class E which allows for commercial, service and business uses to be carried out under the same planning use. Previously, veterinary activities were, depending on their nature, either classed as Use Class D1 or “Sui Generis” and consequently, planning permission for a change of use would be required if, for example, a new tenant carrying out a different type of business went into the property.
As a result of the changing planning regulations, the impact of this has begun to filter through to the marketplace.
Premises of this nature now appeal to a wider array of businesses/tenants and as such, this has had a positive impact on occupier demand and re-letting liquidity for these such assets. It has also meant that properties can be leased much more quickly, without having to wait for the approval of the local authority to any proposed change of use application and given landlords back far more control over their investments.
Whilst occupier demand and re-letting liquidity has seen a positive impact, the impact of changing regulations on rental and capital values does not present as favourably. Historically, properties held under a D1/Sui Generis use class would often command a premium to value, to reflect that there were only a handful of properties suitable for use by Veterinary practices and other similar occupants. This premium to value is no longer commanded as there is a far larger availability of stock for such occupiers and as such, it is expected that the prospects of capital and rental growth within this sector in the short to medium term are minimal.
If you are seeking valuation advice throughout the Lancashire region, please contact Rob Greenwood on 07960 612765 or email rob.greenwood@parkinsonre.com
