Change of Use Commercial Lease Rules for Landlords
If you’ve had a tenant mention “Class E” and assumed that means they can switch from, say, a shop to an office without asking you first, it’s worth slowing down on that one. Class E is a planning law thing — it’s not the same as what your lease actually allows, and mixing the two up can cost you control (and rent) you didn’t mean to give away.
What Class E Means for a Change of Use
In September 2020 the use classes were reorganised in England. A long list of separate categories, A1 shops, A2 financial and professional services, A3 restaurants and cafes, B1 offices and light industry, D1 clinics and nurseries, D2 indoor sport, were folded into a single class: Class E, Commercial, Business and Service.
Class E now covers retail sale of goods other than hot food, food and drink mostly consumed on the premises, financial and professional services, indoor sport and fitness, medical and health services, creches and day nurseries, offices, research and development, and light industrial processes suitable in a residential area.
Because a change of use within the same class is not development, moving between any of those uses does not need planning permission. A shop can become a dental practice. An office can become a pilates studio. On paper, at least.
Two things that pull it back
Article 4 directions. Many local authorities have made directions removing permitted change in particular areas, typically town centres where the council wants to protect retail frontage, and in a number of London boroughs. These are common enough that “no permission needed” should never be assumed without checking the local position.
Planning conditions. A condition on an existing permission can restrict the use of a specific building regardless of the class. If the unit was consented on terms limiting it to retail, that condition survives the reorganisation.
A Warning for Landlords: Wales Never Adopted Class E
This is the part that most template leases get wrong, and it matters for anyone letting or taking space in Cardiff, Swansea, Newport or anywhere else in Wales.
Wales did not adopt Class E. The Welsh use classes remain the pre-2020 list: A1, A2, A3, B1, B2, B8, C1, C2, C3, D1, D2 and so on, with two Wales-only additions, C5 and C6, introduced in 2022 for dwellings used otherwise than as a sole residence and for short-term lets.
So in Wales, turning a shop into an office is still a change from A1 to B1, and it still needs planning permission. The flexibility that English tenants have had for six years does not exist there.
Verified 23 September 2026: Wales has not adopted Class E and still uses the pre-2020 classes (A1, A2, A3, B1, D1 and the rest), confirmed against the Welsh Government’s own guidance on use classes and change of use. The Planning (Wales) Act 2026 restates the Use Classes Order as Welsh regulations, with implementation running to October 2027, which will change the citation but not the position. Re-check the citation if this is still being served in late 2027.
What sits outside Class E entirely
Some uses were deliberately left out, and moving into or out of them needs permission wherever you are. Pubs and drinking establishments, hot food takeaways, cinemas, concert halls, theatres, live music venues, nightclubs, casinos, betting shops, bingo halls, launderettes, petrol stations, car showrooms and scrap yards are all sui generis. Hotels are C1, not Class E.
The practical consequence: a coffee shop can become an office without permission in England, but neither can become a takeaway without one.
And now the part that actually binds you
Here is where the assumption breaks down.
Planning law tells you what the local authority will permit. Your lease tells you what your landlord will permit. They are separate regimes, and the lease is a contract you signed.
A permitted use clause reading “as a retail shop within Class E(a) of the Town and Country Planning (Use Classes) Order 1987 and for no other purpose” restricts you to retail, full stop. The fact that planning would allow the full E(a) to E(g) range is irrelevant. Class E did not amend anybody’s lease.
If your permitted use is drawn narrowly and your business changes, you need your landlord’s consent to a change of use, on whatever terms the lease sets out.
There is one modest protection. Section 19(3) of the Landlord and Tenant Act 1927 says that where a lease requires consent to a change of use and the change involves no structural alteration, the landlord cannot charge a fine or premium for that consent. It can still recover reasonable compensation for damage or diminution in value, and its legal and other reasonable expenses. What section 19(3) does not do is make an absolute prohibition negotiable, or imply any requirement that consent be given at all.
Leases that refer to classes that no longer exist
A large number of English leases granted before September 2020 refer to use classes that were revoked that month. “Use as a shop within Class A1” describes a category that no longer exists in English planning law.
What that now means depends on the drafting. Many leases define the use by reference to the classes as they stood at the date of the lease, which freezes the meaning and keeps the restriction narrow. Others are less clear, and the answer is genuinely arguable.
If you are a tenant with an older lease and a business that has moved on, this is worth reading carefully rather than assuming either way.
The rent review angle
Landlords sometimes want a narrow user clause for control. It is worth knowing what that costs them.
At rent review, the property is valued subject to the restrictions in the lease, including the user clause. A narrow permitted use limits the pool of hypothetical tenants and depresses the rent. The classic authority is Plinth Property Investments v Mott, Hay and Anderson, where a clause restricting use to consulting engineers’ offices produced a materially lower reviewed rent than an open office use would have.
So the user clause is a genuine trade-off rather than a free win for the landlord. Tenants negotiating for a wider clause can reasonably point out that it cuts both ways.
What to do about it
For tenants: make sure the permitted use covers what the business does now and has room for where it is heading in two or three years. Widening it at heads of terms stage is a conversation. Widening it in year three is an application for consent, with the landlord’s costs attached.
For landlords: decide whether you actually need the control, or whether you are restricting the use out of habit at the price of a lower rent at review.
Frequently asked questions
In England, usually not, because both are within Class E and a change within the same class is not development. Check for an Article 4 direction and for planning conditions on the building. In Wales, yes, because Wales did not adopt Class E and the change is from A1 to B1.
No. Wales retains the pre-2020 use classes, with two Wales-only additions. Any guidance about Class E flexibility applies to England only.
Not without the landlord’s consent. Planning permission and the lease permitted use clause are separate. Even where planning allows the change, the lease clause binds you as a matter of contract.
Section 19(3) of the Landlord and Tenant Act 1927 prevents a landlord charging a fine or premium for consent to a change of use that involves no structural alteration. The landlord can still recover reasonable compensation for damage or diminution in value, and its reasonable legal and other expenses.
It depends on the wording. Many leases define the use by reference to the classes as they stood at the date of the lease, which keeps the original narrow meaning. Others are less clear. It is worth taking advice rather than assuming the clause has widened.
Aqqord leases set the permitted use out in plain terms at heads of terms stage, so both sides know what the space can be used for before anything is signed. Preview a full draft for free at aqqord.com £375 plus VAT per party, payable only on completion.
