If you are planning on investing in commercial property, it is important that you understand the different types of property available for investment, so that you can make the correct decision for you.
Commercial property in the UK is divided into different classes based on the use and function of the building, under the Town and Country Planning Order 1987. This legislation determines how different properties are occupied, so whether you choose residential, office, industrial or retail, make sure that the planned commercial use of the building matches the legislation.
The commercial property investment classifications are as follows:
- A1 – Shops
This property type must be used for shops, retail warehouses, hairdressers, undertakers, travel agencies, ticketing agencies, post offices, dry cleaners, pet shops, butchers, sandwich bars, showrooms, funeral directors, and internet cafes.
- A2 – Financial and Professional Services
This classification is specific to banks, building societies, estate agencies, recruitment agencies, financial services, and betting offices.
- A3 – Food and Drink
A3 identifies premises where food and drink are consumed, including restaurants, pubs, snack bars, cafes, wine bars, and the sale of hot food.
- A4 – Drinking Establishments
A4 properties should be used for businesses where the primary purpose is the sale and consumption of alcoholic drinks. This includes public houses, bars, and other establishments, excluding night clubs.
- A5 – Takeaways
A5 properties should be used for takeaways, where the primary purpose is the sale of hot food for consumption off premises.
- B1 – Business
B1 represents businesses that are offices, but not those as previously discussed in A2. B1 businesses include research & development studios, laboratories, and light industries which don’t affect the local area through noise, light and air pollution.
- B2 – Industrial
This is for general industrial use for those other than in B1. This also excludes incineration, chemical treatment, landfill and hazardous waste, which fall into categories B3, B4, B5, B6, B7.
- B8 – Storage or Distribution
B8 properties must be used for storage, warehouses, or distribution centres.
- C1 – Hotels
This category includes hotels, guest houses, hostels, and boarding houses.
- C2 – Residential Institutions
C2 defines residential institutions such as schools, colleges, hospitals, nursing homes, boarding schools, and training centres.
- C2A – Secure Residential Institution
C2A is for a secure residential premises, including a prison, young offenders institution, detention centre, custody centre, secure hospital, and military barracks.
- C3 – Dwelling Houses
This category of property must be used as a dwelling for small businesses at home, communal housing, and a home for a single person, a family, or no more than six living together in a single household.
- C4 – Houses in Multiple Occupation
These properties must be used as small shared houses occupied by between 3 and 6 individuals, who share a kitchen and bathroom.
- D1 – Non-Residential Institutions
This categorises places of worship, church halls, clinics, health centres, nurseries, day centres, museums, libraries, art galleries, exhibition halls, practitioners, libraries, public halls, or law courts.
- D2 – Assembly and Leisure
This includes cinemas, concert halls, sports halls, swimming baths, ice-skating rinks, gyms, bingo halls.
Some properties don’t fit into these main class uses, and these are classified as sui-generis. These include betting shops, payday loan shops, theatres, scrap yards, petrol stations, nightclubs, and amusement centres.
If you are planning to redevelop, regenerate, or alter a building’s classified use, you may need planning permission. It is advised that you seek advice and carry out a building survey when taking on a project of this calibre. A survey can be carried out on all of the above property types, and will ensure that the property is structurally stable and there are no major building defects.
Make sure you understand these property classifications before you invest in commercial property to make sure that your business ideas fit with the building’s designated purpose. Whether your investment will include retail, industry, office or residential, make sure you are prepared for investment.
Allcott Commercial is a building consultancy providing project management, building surveying, architectural and structural engineering services to a range of property investors, occupiers and developers throughout England and Wales. We can advise you on commercial investment and carry out any related building surveying services you may require.
January 3, 2017