Covid-19 and the "meanwhile use" of unused and unoccupied premises

27 October 2020

Why do we need to rethink the use of space?

In the context of a global pandemic in which social distancing is now the new normal, rethinking how we use space has never been so important.

The question of "the future of the office" has been asked repeatedly as workers remain cautious about returning to the office and will be asked again in the coming days and weeks as new Government guidelines are issued to re-encourage working from home where possible. Not only is there some evidence of break clauses being exercised in respect of certain office space, the loss of footfall from workers has resulted in retail land leisure premises closing both temporarily and permanently leaving landlords without rental income.

This means that landowners are, by necessity, having to seek creative solutions to generate positive returns from unused space not only to weather the storm but also to provide the breathing space needed to develop longer term strategies in response to the type of demand (or lack thereof) that emerges in the post-pandemic market.

What is Meanwhile Use?

The term "Meanwhile Use" is a loose designation for activities that occupy empty space in the short to medium term, taking advantage of a window of opportunity on a site either before or after another commercial use. Such spaces are typically found on development sites that have been left vacant whilst the landowner awaits planning permission and are usually supplied cheaply to account for the fact that the land is second hand and time sensitive (i.e. awaiting its primary use).

A recent example of Meanwhile Use in action was the occupation by an outdoor cinema business of a disused car-park at Printworks in east London throughout July. This project brought life (in the form of social-distanced screenings of classic films) to an otherwise empty development site on which large scale regeneration is anticipated in the coming months.

How can Meanwhile Uses offer value?

Value to landowners

Utilising empty space "in the meantime" can offer value to landowners in more ways than one. Not only are vacant properties taxed at full rates (and at a premium after two years), but empty land can also be costly to secure. The income generated from Meanwhile Use activities can therefore provide landowners with an element of relief from such financial burdens, for example, though licence fees payable under licences to occupy or rent under short term (contracted out) leases.

The use of premises for Meanwhile purposes can also enable property to adapt to social and economic demand within relatively quick and unencumbered timescales in a way that cannot usually be achieved (under a traditional lease scenario). This may be of particular benefit for landowners who anticipate that the primary use for which their property is intended may experience a resurgent demand in the relatively near future.

Value to community

Meanwhile Use of land can also offer value to communities. Positive use of land can help landowners to build relationships within communities by providing a platform for public engagement. Successful schemes and uses can raise the profile of an area and can mitigate the negative impacts of longer term development plans on local businesses and residents (this is particularly helpful for landowners who may now be considering redevelopment of their underutilised rental space as a preferred method of extracting value).

Against the backdrop of an uncertain market and a pandemic Meanwhile Use can preserve the flexibility of property and be used to trial different uses. Rather than achieving the aim of simply filling a void space, Meanwhile Use can enhance such spaces by reacting to demand/need at a local level. There is certainly an argument for socially responsible use of property in the current climate which might speak directly to businesses and investors’ ESG initiatives.

How might recent legislative change facilitate Meanwhile Uses?

There have been several recent legislative changes that have the potential to facilitate Meanwhile Use. The key change being the amendments made to the use class designations under the Use Classes Order 1987 introduced by the Town and Country Planning (Use Classes) (Amendment) (England) Regulations 2020.

Planning Changes

From 1 September 2020 existing commercial, business and service land uses have been merged into a single use class. Specifically, Classes A1 (shops), A2 (professional services), A3 (restaurants), B1 (offices), some parts of D1 (medical health) and D2 (indoor sports/fitness) will now be subsumed into a new Class E. This means that there will no longer be a requirement to apply for planning permission for a change of use between any of the categories now included in the new Class E.

The new regulations also introduce the concept of ‘part use’, which appear to allow for the change of part of a building within use Class E without requiring permission. These amendments afford stakeholders greater flexibility with respect to land use and should, going forward, reduce the barriers to those wishing to put spaces to Meanwhile Use.

It should be noted that there has been a legal challenge to the Statutory Instrument bringing into effect the changes to the Use Classes Order on grounds of failure to carry out proper environmental assessment, give due regard to the responses to consultation and other material considerations. A hearing by a two-judge Divisional Court was scheduled for 14-15 October 2020 and the outcome is awaited.

Other changes

Temporary changes to certain other legislative provisions (by virtue of the Business and Planning Act 2020) have also been made in an attempt to support existing long term uses of land – particularly retail and hospitality uses - to enable owners/occupiers to carry on some trade whilst Covid-19 restrictions take effect. Such changes include an extension to alcohol licensing (off-sale permissions) and to the grant of pavement licences (streamlining the process) both of which are designed to facilitate the use of available outdoor space in the vicinity of existing premises.

These temporary measures, the changes to use classes and the potential to use space for Meanwhile Uses do at least provide landlords and tenants with some options for preserving their income (whether from rent or business profit) in the immediate future.

The unintended effect 

Businesses, such as small start-ups or small entrepreneurial businesses may have ordinarily been reluctant to take leases of spaces (due to cost and tie-ins) or struggled to find appropriate spaces (due to prevalence of ‘office only’ space) but the effect of Covid-19 has been to make spaces available to potential occupiers that might otherwise not be on the market.

There may be an opportunity for a mutually beneficial relationship to arise between small businesses for whom a ‘Meanwhile Use’ would work (open air cinema, pop up store, seasonal cocktail bar), existing businesses who may want to rid themselves of some of their space and landlords keen to maintain income and repair of premises.

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