What lasting effects may the coronavirus pandemic have on the high street?

The closing of the high street during the coronavirus pandemic has had enormously serious consequences for all the businesses operating there. As we start to look forward, we have to wonder what the lasting effects will be, post-COVID-19. One view is that the pandemic has merely acted as a catalyst to high street trends which were already in progress. The recent subsidies in rent and rates may have papered over the cracks, but perhaps now there will be more of a blank canvas, giving the opportunity for a major reshaping.

Casting our minds back further, we know that after the terrible impact of World War II, there was great need for physical rebuilding on a large scale and an investment opportunity. The recovery from the pandemic is clearly going to be a very different experience: business confidence, wellness and safety of employees and customers is today at the forefront of everyone’s minds, at least in the short term.

As we entered lockdown, the Prime Minister seemed to want to capture a Churchillian spirit as he tried to rally the country to the common cause. Truth be told, there is so much more still to do in dealing with this modern-day fight against an unseen enemy. It seemed to me then that the focus needed to extend beyond the current state of the crisis (now with further lockdowns anticipated), to increasingly look beyond it. In doing this we could give ourselves every chance of achieving the speedy recovery that we all want to see. Happily, it looks as though the Government agrees with this view: it has started to develop ideas which it believes will revive the high street as well as improving the number of housing units available in a timely manner. The soon-to-be-enacted use class changes (1st September 2020) being an example, plus the permitted development rights (31st August 2020) and the very recently published white paper proposing a stream lined planning regime and investment in infrastructure.

What may the high street look like post-coronavirus?

The changes to the use classes order, set to come into force in September, is an important measure which should allow the high street to emerge, not only as an updated hub for retail, but also as a place which offers recreation, wellbeing facilities and, perhaps, flexible office space. The high street could again become that meeting-place and hub that used to flourish in every town but with a rather different mix – a place for work and leisure.

Similarly, offices may have to adapt. Many businesses have seen that their workforce can function effectively from home and some employers will want to embrace that change of working culture. Inevitably that trend would reduce the long-term demand for office space. In the shorter term however, space is still needed to accommodate those attending the office safely, in “COVID secure” conditions. Perhaps this could see a return to the cellular office.

Much of our thinking as to what the high street and office sector will look like post-pandemic is still evolving. The situation remains fluid. However, experience teaches us that we need to look for flexibility as we think about the legal and regulatory framework which governs these parts of our economic life: flexibility in regulation will surely be an enabler of economic recovery. Are the new use class changes and permitted development rights enough and sufficiently far reaching?

Flexible class changes to shops

As things stand, the current legislation governing changes of use, permits changes within classes of use (and sometimes between classes) without the need for new planning permission. This, at least, is a positive thing: permission takes months to obtain, is costly and has often been a significant burden. It would be a hindrance to our recovery as we emerge from the pandemic.

The existing planning category for shops (known as class (A1)) is fairly broad and includes hairdressers, travel agencies, post offices, pet shops, sandwich bars, dry cleaners, and internet cafes. Under what is known as the General Development Order, it is permitted to change from A1 to a number of other classes; a mixed use (shop and up to two flats); a restaurant or café; financial and professional e.g. banks and building societies (A2); dwelling houses (C3) or assembly and leisure e.g. cinemas and gyms (D2).

Remember, however, that local authorities do currently have the power to remove these permitted changes by what is known as an “article 4 direction” and, where that is done, a planning application would be required for change of use. Although this looks as though it is flexible, the current rules have been so greatly amended over the years that it is not always easy to discern whether permission for a particular change is needed. Today’s regime is anachronistic and speaks to a time when local and central government control was much greater, largely because of the need for much closer co-ordination in the rebuilding that took place after the War.

What is really needed now, in order to regenerate our high streets, is a much more adaptable and generally easier approach. Change of use ought not to be a stumbling block when it comes to buildings already established on the high street. Introduction of an overarching “High Street” class (which would still have to include some categories that would need planning permission, such as nightclubs and the like) seems obvious, automatically giving flexibility for buildings to be used, not only for retail and offices (as now), but also for a wider category which would include beauty salons, creches, restaurants and takeaways, health, leisure and residential spaces. Changes between these various uses in a “High Street” use class are all permitted without the need for planning permission.

Clearly, planning controls are still needed for new buildings (but not for the use within the class into which the new building fell). Implementing enhanced environmental controls would ensure that all the uses were compatible, so as to mitigate clashes between residential vis-à-vis restaurants and nightclubs, for example.

What the Government is enacting in September goes some way to achieving a high street class. Former Use Classes A1-A3 and B1 are replaced with a new Use Class E which incorporates all those uses as well as gyms, nurseries and health centres.

The other new use classes are Class F.1 Learning and non-residential institutions (which includes non-residential educational uses, museums, art galleries, libraries, public halls, religious institutions or law courts) and Class F.2 Local community (including use as a shop of no more than 280 square metres, mostly selling essential goods, including food, at least 1km from another similar shop, and use as a community hall, area for outdoor sport, swimming pool or skating rink). The classes will allow ‘destination’ uses for flexible high street diversity. Is this enough? The permitted development rights (effective 31 August 2020) – adds to the mix of opportunity allowing residential building on top of commercial or mixed use property within limitations. However, the limitations could restrain these opportunities, whilst local authorities always have the ‘article 4’ opt out to the permitted development rights at their disposal if required. In addition to this, developers may look to out of town commercial buildings as cheaper residential development prospects, further detracting the focus away from the high street.

As the country begins to emerge from lockdown and we hope for a strong recovery, the changes should begin to breathe new life into some of the dustier corners of our planning laws. But it is not only the more flexible regime on offer that will drive success, everyone in the market will need to embrace the new approach and be bold. Perhaps the unique circumstances of 2020 have provided the impetus needed to rejuvenate the high street. My hope is that those taking retail space will be local businesses and community-driven initiatives. Each high street might then recapture some of the unique local character which, in recent times, was too often lacking. To achieve this will require investment from local authorities, enabling start-ups and small businesses to get off the ground. Also, a reconsideration of permitted development rights for residential development above high street buildings may allow investors to make their returns and possibly offer more favourable terms to small retailers.

Planning for the Future

As I have been writing this, the Government has published its white paper titled ‘Planning for the Future’, which suggests more radical changes: an easier planning process and improved outcomes for design and sustainability. This will be welcomed by many at a time when the uniquely difficult circumstances of 2020 have made us even more aware of the need for change.

Further information

Suzanne Middleton Lindsley is a Partner in Druces LLP’s large Real Estate team which provides a complete commercial and residential property law service to a wide variety of corporate and individual clients. The team acts on behalf of developers, investors and high net worth individuals on core commercial and residential property needs as well as providing additional services including tax advice and dispute resolution.

If you would like to find out more about how our specialist team can help you, please contact:

• Suzanne Middleton Lindsley at esml@druces.com or +44 (0)20 7216 5555