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Getting the C3 Blues: Is the Use Classes Order no longer useful when it comes to Specialist Housing?

It is frequently stated that necessity is the mother of invention.* Whilst I am not one to place all that much faith in proverbs; the housing crisis does seem to have coincided with a vast increase in innovative or specialist housing products, designed to make finding suitable accommodation easier for those who are not well served by the housing market.

In addition to more established types of specialist housing, such as:

  • student accommodation;
  • sheltered housing; or 
  • extra-care and supported living

we are now seeing a wide variety of relatively novel types of purpose built residential accommodation come to market. Including, but by no means limited to:

  • Micro apartments
  • Build to Rent Schemes
  • Co-Living projects
  • Retirement communities; and
  • Eco homes or sustainable living projects

This wide variety in new forms residential housing is, perhaps unsurprisingly, causing problems for the planning system; which is not known for being agile or quick to react to changing circumstances.

As evidenced in the article quoted below,** part of the problem comes down to classification. Local Planning Authorities are used to dividing development proposals into fairly broad categories, and indeed are encouraged to do so by planning legislation - in particular the Use Classes Order*! and the Permitted Development Order*". Local and national planning policies are predicated on this same system of classification; which also forms the basis of the council's requests for s.106 obligations and the CIL payments that a development is expected to make. 

The current 'use classes' for residential developments are as follows:

  •  C1: Hotels 
  •  Class C2: Residential institutions 
  •  Class C2A: Secure Residential institutions
  •  Class C3: Dwellinghouses
  •  Class C4: Houses in Multiple Occupation
  •  Sui Generis or Without Classification

Each of these categories carries with a number of benefits and obligations. For example, C3 Dwellinghouses qualify for a wide range of permitted development rights, which are not available to the other residential categories of housing; but are also expected to make contributions towards affordable housing, education and other types of infrastructure.  C2 Developments do not have the same PD rights, but are also not expected to provide the same level of contributions.

The problems come, as evidenced in the article below, when it is not entirely clear which category (if any) a particular development type falls into.

Extra Care Housing (a form of retirement living accommodation where care is provided to the residents as part of their occupancy) can either fall within Use Class C2 or Use Class C3, depending on the level of care provided. As Planning Resource has reported, Councils are not taking a consistent approach to decided which side of the fence a scheme will fall on. This can cause very real problems for the sector as the viability profile of a C2  development is very different to that of C3 housing; so expecting a genuine extra care development to make affordable housing contributions can result in the development simply not going ahead.

Similar problems arise with student accommodation, which depending on the size and the form of the development can either be C4 or Sui Generis. 

Some of the newer and more innovative entrants to the market are even more problematic. For example; how should you classify a co-living development? would it be C4 or Sui Generis? Could it qualify as a hotel? Are apartments that are let through Airbnb C1, C3 or without classification? Where should the line be drawn between a Hotel (C1) and a hostel (often, but not always C4 or Sui Generis)? 

The answer to these questions is often a matter of fact and degree, tied to the level of services provided to the occupiers, the facilities available, the size of the scheme or (in the case of HMOs) the number of people living there.

As the types of housing available becomes increasingly more diverse; so do the economic models on which they are predicated. A block of flats that will be operated as a build to rent scheme has a different viability profile to the same development, if it were sold as market housing. A co-living scheme may look very similar to student accommodation, but the operating model (and how the development generates income) are quite distinct. Regardless of this, these schemes can easily end up being lumped together by a local planning authority and treated in exactly the same way for the purposes of s.106 requirements and CIL. Persuading Councils to deviate from their standard position often requires a persistent and sustained education campaign by the developers involved, frequently involving open book viability assessments and case studies from other councils or jurisdictions.

Whilst these campaigns do appear to be bearing fruit in some situations ( for example, it is now being recognised that Build to Rent Schemes require a specialist form of affordable housing provision) progress is slow. Indeed, the draft New London Plan's position that any dwelling which provides a resident with their own front door should be classified as C3, demonstrates that it can often be a case of two steps forward and one step back.

As the lines between use classes become increasingly blurred, maybe it is time to ask whether it is still fit for purpose. Or perhaps, it might be time to recognise that there is increasing demand for schemes that don't fit neatly into our current system of classification.... perhaps it is time to take each model of housing provision on its own merits and take a more flexible, bespoke approach. A little bit of blue sky thinking can hardly make our housing crisis worse....


*I have a pet theory that it is actually boredom... but that is a story for another day

** a really good planning resource piece on extra care housing, featuring none other than IM's very own Carl Dyer (for those who don't know, Carl is my boss and a bit of a guru on all things retirement living). 

*! full title the Town and Country Planning (Use Classes) Order 1987/764

*" full title:  Town and Country Planning (General Permitted Development) (England) Order 2015/596

The issue was illustrated in a decision last week that saw plans for luxury retirement homes in west London refused by London mayor Sadiq Khan after Greater London Authority (GLA) planners disagreed with the local authority over what use class the development should fall under. The mayor has ordered the Royal Borough of Kensington and Chelsea to refuse planning permission, after GLA officers advised that the proposal, which included 142 specialist extra care dwellings, fell within the C3 residential use class and was therefore required to meet the London Plan’s affordable housing policies. Kensington and Chelsea councillors had approved the application after officers advised that the scheme "clearly" fell within the C2 nursing home use class based on the proposed level of care to be provided for residents.”