Why Commercial Property Investors Should Check Planning and Permitted Use Before Buying

A great building can become a poor investment if the intended occupier cannot legally use it

When assessing a commercial property investment, investors naturally concentrate on the fundamentals.

Location. Rent. Yield. Tenant demand. Building condition. Access.

But there is another question that should be answered before committing to an acquisition:

What can the property actually be used for?

A warehouse may look ideal for a particular business, but planning restrictions, existing permissions or site-specific conditions could affect whether that use is permitted.

For investors across Bury, North Manchester and the wider North West, understanding planning and permitted use can help avoid problems after acquisition and identify properties with greater flexibility and long-term letting potential.

Planning use and lease use are not the same thing

This is one of the most important distinctions in commercial property.

There may effectively be two separate questions:

Does the planning position allow the proposed activity?

and:

Does the lease allow the proposed activity?

A tenant might have planning permission for a particular use but still be prevented from carrying it out by the lease.

Alternatively, a lease might permit an activity that requires separate planning consent.

Both need to be checked.

What are commercial property use classes?

The planning system groups many property uses into different categories.

In England, significant changes were introduced in 2020 with the creation of Use Class E.

Class E covers a broad range of commercial, business and service uses.

These include various activities involving:

• Shops
• Financial and professional services
• Cafés and restaurants
• Offices
• Indoor sport and recreation
• Medical and health services
• Nurseries
• Certain research and industrial activities

The intention behind the broader class was partly to provide greater flexibility between different commercial uses.

Current guidance can be found through the Planning Portal.

Why Class E can be attractive to investors

Flexibility can reduce reletting risk.

Imagine a commercial building that could potentially appeal to several different types of occupiers without requiring a planning application for every change within the same use class, subject to the specific circumstances.

That could broaden the market.

Instead of relying solely on office demand, for example, the property might potentially appeal to other qualifying Class E businesses.

A wider legitimate occupier pool can make an asset more resilient.

Industrial property needs particular attention

Industrial and warehouse property can involve different use classifications.

Uses commonly encountered include activities falling within areas such as:

• Light industrial
• General industrial
• Storage and distribution

The distinction can matter considerably.

A straightforward storage warehouse and a heavy manufacturing operation may create very different impacts in terms of:

• Noise
• Traffic
• Deliveries
• Emissions
• Neighbouring occupiers

Investors should therefore establish the lawful planning position rather than assuming every industrial building can accommodate every industrial business.

B2 and B8 are not interchangeable

Two classifications frequently encountered in industrial property are B2 and B8.

B2 generally relates to general industrial use.

B8 generally relates to storage or distribution.

A logistics company and a manufacturer may therefore have different planning requirements even though both businesses are looking for an industrial building.

For investors, this matters because the existing planning position can influence the pool of potential tenants.

Some uses are sui generis

Certain uses do not sit within one of the standard use classes and are described as sui generis.

These can require particular attention when a property changes occupation.

Investors considering specialist commercial uses should obtain planning advice before assuming that a proposed activity can operate from the building.

This becomes particularly important where an investment strategy relies upon securing a specific type of occupier.

Motor trade uses deserve careful investigation

Automotive businesses can be attractive commercial tenants, particularly across established industrial areas.

However, “motor trade” can cover very different activities.

Examples include:

• Vehicle sales
• Repairs
• MOT testing
• Bodywork
• Tyre fitting
• Vehicle storage

The planning implications can differ depending on the activity and property.

Noise, customer traffic and vehicle storage may also be relevant.

Investors should establish exactly what the proposed occupier intends to do.

Trade counters are another important example

Trade-counter demand has become an important part of many industrial estates.

Businesses may combine:

• Storage
• Distribution
• Customer collections
• Product display
• Sales

From an investment perspective, trade-counter capability can be attractive because these occupiers often value prominent, accessible industrial locations.

However, investors should confirm that the proposed combination of activities is appropriate for the property from both a planning and lease perspective.

Food businesses can create additional requirements

A commercial unit might physically suit a food operator but require more investigation before occupation.

Issues can include:

• Extraction
• Ventilation
• Waste storage
• Deliveries
• Odour
• Opening hours

Planning is only part of the picture.

Building regulations, environmental health and other requirements may also be relevant depending on the operation.

Investors should understand these issues before spending money adapting a building for a particular occupier.

Gyms and leisure operators can unlock unusual commercial spaces

Some older industrial and commercial buildings can attract leisure businesses such as:

• Gyms
• Fitness studios
• Indoor sports operators
• Children’s activity businesses

These occupiers can provide alternative demand for buildings that may no longer appeal to traditional industrial businesses.

But issues such as parking, noise, opening hours and neighbouring uses need to be considered.

Alternative use can create opportunity, but it needs to work operationally as well as legally.

Planning history can reveal valuable information

Before purchasing commercial property, investors should review the site’s planning history.

Previous applications can reveal:

• Historic uses
• Approved alterations
• Refused proposals
• Planning conditions
• Extensions
• Changes of use

This information can help investors understand both the property and the local authority’s previous approach to the site.

Local authority planning portals are particularly useful for this research.

Planning conditions can affect an investment

Planning permission may have been granted subject to conditions.

Examples could relate to:

• Opening hours
• Deliveries
• External storage
• Noise
• Parking
• Landscaping

A permission therefore needs to be read in full.

The fact that a particular use has planning permission does not necessarily mean it can operate without restrictions.

Those restrictions may materially affect an occupier.

External storage can be particularly important

Industrial tenants often want to use yards for:

• Materials
• Vehicles
• Containers
• Equipment

Investors should not automatically assume that every external area can be used for unrestricted storage.

Planning conditions, lease restrictions or title matters may affect how external land can be used.

This can significantly influence the attractiveness of a site to certain occupiers.

Parking requirements can limit alternative uses

Changing from one commercial use to another can alter parking demand considerably.

A warehouse employing ten people may require relatively little parking.

A gym, training centre or customer-facing business occupying the same floor area could generate far more vehicle movements.

Even where a building itself works, the site may not.

Investors should therefore consider the entire property.

Neighbouring occupiers matter

A use that works perfectly on one industrial estate may create problems on another.

For example, a noisy operation could be less suitable where neighbouring properties include:

• Offices
• Residential accommodation
• Customer-facing businesses

Commercial investors should understand the surrounding environment before targeting specialist occupiers.

Residential development nearby can change commercial areas

North Manchester continues to see residential development in and around established commercial locations.

This can create opportunities by increasing population and local spending.

But it can also change the relationship between industrial and residential uses.

Noise, deliveries and operating hours can become increasingly sensitive.

Investors should therefore monitor surrounding planning activity as well as the property itself.

Planning flexibility can improve reletting prospects

One of the strongest characteristics a commercial investment can have is flexibility.

If a property can legitimately accommodate a broad range of businesses, the landlord may have more options when a tenant leaves.

A highly specialised planning position can create greater reliance on a narrow occupier market.

That doesn’t automatically make it a bad investment.

It simply changes the risk profile.

Restrictive permitted-use clauses can reduce flexibility

Even where planning allows several activities, an existing lease may contain a narrow permitted-use clause.

For example, the lease could restrict occupation to a specific business activity.

This can matter if:

• The tenant wants to diversify
• The business is sold
• Assignment is proposed
• Market conditions change

Investors should review how restrictive the lease is and whether that affects long-term asset management.

Wider permitted use can help tenant retention

Businesses evolve.

A company beginning primarily as an online retailer might later add:

• Customer collections
• Trade sales
• Showroom space
• Light assembly

If the lease is unnecessarily restrictive, the tenant may eventually need to relocate.

Where appropriate, sufficient flexibility can support longer-term occupation.

However, landlords also need to protect the property and neighbouring occupiers.

Planning can create value

Planning isn’t only about avoiding restrictions.

It can also create investment opportunities.

An investor may identify a property where securing a broader or more valuable use could improve:

• Rental demand
• Capital value
• Exit options

This is particularly relevant to underused buildings and sites.

However, investors should avoid paying today for planning value that has not actually been secured.

Don’t buy based solely on planning speculation

A common investment mistake is assuming:

“The council will surely allow it.”

Planning decisions depend on the individual site, proposal and relevant policies.

If an investment only works financially if a particular permission is obtained, that represents additional risk.

Investors should understand exactly what is already permitted and what remains speculative.

Conditional purchases may sometimes be appropriate

Where planning permission is fundamental to the investment strategy, purchasers may sometimes structure transactions so completion depends upon particular conditions being satisfied.

The appropriate structure depends on the deal and requires professional legal advice.

This can potentially reduce the risk of acquiring a site that cannot support the intended strategy.

Development plans can provide useful clues

Local authorities publish planning policies setting out how areas are expected to develop.

These can identify locations intended for:

• Employment
• Housing
• Regeneration
• Mixed-use development

Understanding these policies can help investors assess longer-term opportunities and risks.

For Bury properties, investors can review information through Bury Council, while other North Manchester locations should be checked through their relevant local planning authority.

Planning Portal is a useful starting point

The Planning Portal provides useful general information on planning permission, changes of use and the planning system in England.

However, online guidance should not replace property-specific advice.

Commercial transactions can involve complicated planning histories and site-specific restrictions.

Title restrictions can create another layer

Even where planning permission exists, private legal restrictions may potentially affect use.

For example, title documents could contain restrictive covenants.

This demonstrates why planning due diligence and legal title due diligence need to work together.

A planning permission does not necessarily override private property rights.

The investor’s solicitor should investigate the title carefully.

Lenders may also consider property use

Commercial lenders generally want to understand the asset securing their loan.

A highly specialised use may be assessed differently from a flexible warehouse capable of attracting numerous occupiers.

The lender may consider:

• Alternative use
• Reletting potential
• Marketability
• Planning position

Flexibility can therefore influence more than occupational demand.

Planning should be considered before refurbishment

Investors planning significant refurbishment should confirm the intended future use before finalising the specification.

There is little value in spending heavily adapting a property for an occupier if the required use cannot be secured.

The correct order is generally:

Investigate → advise → design → invest.

Not the other way around.

North Manchester’s diverse economy creates opportunities

Bury and North Manchester support a broad range of businesses, including:

• Manufacturers
• Warehousing businesses
• Trade suppliers
• Offices
• Retailers
• Leisure operators
• Automotive businesses
• Professional services

This creates opportunities for commercial properties capable of adapting to different occupier requirements.

The more investors understand the planning framework, the easier it becomes to recognise that potential.

Citrus Commercial Circle’s market insight

At Citrus Commercial Circle, we believe one of the most important questions when assessing commercial property is:

How many different businesses could realistically occupy this building?

That requires more than looking at floor area.

Investors need to consider:

• Planning
• Lease restrictions
• Access
• Parking
• Power
• Neighbouring uses
• Building specification

A flexible commercial property with broad occupational appeal can provide valuable protection when markets change.

Final thoughts

Planning and permitted use can have a major influence on commercial property investment performance.

A building may look perfect for a particular tenant, but planning restrictions, conditions or lease provisions can change what is actually possible.

Equally, properties with flexible lawful uses can provide investors with a wider occupier market and more options when circumstances change.

At Citrus Commercial Circle, we are proud to help landlords and investors across Bury and North Manchester understand the local commercial market and identify properties with the flexibility and fundamentals required for long-term performance.

Based in Bury. Active across North Manchester. Always on your side.

Call us today: 0161 383 1806

Email: info@citruscommercialcircle.co.uk

Visit: citruscommercialcircle.co.uk

Let’s unlock the full potential together.

Citrus Commercial Circle – Where standards meet success.