How Planning Reforms Changed the Landscape for Commercial Property

Unlocking New Opportunities for Nursery Schools: 

Introduction

The United Kingdom has long faced challenges in balancing urban planning regulations with the needs of evolving industries. Among the most notable policy shifts in recent years has been the planning reform enacted by the previous Conservative government, which saw the dissolution of restrictive commercial use classes. The introduction of a unified Commercial Class E in September 2020 represented a transformative approach to commercial property use, dismantling bureaucratic barriers that previously hindered businesses, particularly those in education and childcare.

For years, nursery schools struggled with planning constraints, often requiring burdensome and time-consuming Change of Use applications to convert commercial spaces into viable educational environments. The removal of these restrictions now means that nursery schools can operate from any property classified under Commercial Class E without additional planning permissions. This reform presents an incredible opportunity—not just for childcare providers but also for real estate asset managers struggling with vacant office spaces post-pandemic.

Understanding the Shift: The Move to Commercial Class E

Prior to the reforms, the UK planning system categorised commercial properties into distinct Use Classes, dictating what type of business or institution could operate in a given space. Nursery schools previously fell under Class D1 (Non-Residential Institutions), while most commercial properties—such as offices (B1), retail stores (A1), restaurants (A3), and financial institutions (A2)—were categorised separately. This fragmentation made it extremely difficult for businesses to repurpose spaces without undergoing expensive and lengthy planning permission processes.

What Changed?

With the introduction of Commercial Class E, the UK government consolidated various commercial categories—including retail, professional services, offices, and leisure—into a single designation. Importantly, nursery schools now fall under Class E, allowing them to take up space in previously restricted commercial properties without requiring a Change of Use application.

According to the UK government’s 2020 Planning Reform Statement (GOV.UK), this change was intended to provide businesses with greater flexibility, reduce bureaucracy, and support economic recovery. The move was particularly timely given the impact of COVID-19 on commercial real estate, which saw office vacancy rates in major cities like London skyrocket as remote work became the norm.

How the Reforms Benefit Nursery Schools

For nursery operators, these planning reforms have removed a major barrier to expansion. Historically, opening a new nursery in a commercial space required landlords to agree to and apply for a Change of Use from Class A, B, or other designations to Class D1. This process could take six to twelve months, requiring costly planning consultants and often facing objections from local planning authorities or community groups.

With the reforms, nursery providers can now lease or purchase commercial properties without additional planning approval. This shift has led to several benefits:

1. Faster Expansion & Reduced Costs

Nurseries no longer need to wait months for Change of Use approvals. This means faster setup times and reduced legal and administrative expenses. For operators looking to grow quickly, this is a game-changer.

2. Increased Availability of Suitable Locations

Previously, finding the right premises for a nursery was difficult due to landlord reluctance to change property classification. With the broad adoption of Class E, commercial landlords are more open to renting to nurseries, expanding the number of suitable properties in central business districts, mixed-use developments, and residential areas.

3. Flexibility to Adapt to Changing Market Needs

Given the ongoing evolution of urban centres—particularly with the decline of traditional retail and office demand—nurseries can now set up in previously inaccessible prime locations, helping balance the supply-demand gap in childcare services.

The Role of Landlords & Real Estate Asset Managers

The shift to Class E is also a significant opportunity for landlords and real estate asset managers, particularly those struggling to fill vacant office spaces in London and other major cities. The post-pandemic reality has drastically altered demand for commercial real estate, leaving many property owners searching for new tenant categories to sustain occupancy rates.

Why Nurseries are the Ideal Tenants for Vacant Commercial Spaces

• Long-Term Stability: Unlike retail stores or hospitality businesses, nurseries offer consistent, long-term occupancy due to sustained demand for childcare.
• Government-Backed Sector: The UK government has increased funding for early childhood education, making nursery schools a low-risk, high-security tenant.
• Positive Community Impact: Nurseries enhance local communities, making commercial spaces more attractive to families and increasing foot traffic in surrounding areas.

Real-World Impact: Nurseries Expanding into Commercial Spaces

Several nursery groups have already leveraged the Class E classification to expand into previously inaccessible areas. At Hatching Dragons, for example, we have been able to open new sites in mixed-use developments and central business districts, ensuring working parents have access to high-quality early childhood education close to their workplaces.

Other major nursery chains have followed suit, rapidly increasing the number of sites across London, taking advantage of available retail and office spaces that would otherwise remain empty.

What Needs to Happen Next?

Despite the regulatory improvements, many landlords and commercial property owners remain unaware of the opportunity presented by the reclassification of nurseries under Class E. To maximise this potential:

• Local Authorities & Property Networks Should Promote Nursery Tenants: Given the clear social and economic benefits, councils and real estate associations should actively promote nursery tenancy in commercial spaces.
• Landlords Need to Rethink Tenant Strategies: With traditional office demand shifting, landlords should view nurseries as a secure, long-term investment rather than an unconventional commercial tenant.
• Public-Private Partnerships Could Facilitate More Conversions: Councils and property developers could work together to fast-track nursery tenancy agreements, particularly in urban areas with childcare shortages.

Partner with Hatching Dragons for Sustainable Commercial Property Use

If you are a real estate asset manager or landlord struggling to find tenants for vacant office or commercial spaces, Hatching Dragons Nursery Schools is actively seeking new property partnerships. With the new planning reforms, we can operate from a variety of commercial properties without the need for planning delays, providing long-term security and a positive contribution to the local community.

Get in Touch Today

We are currently seeking partnership opportunities across the City of London, Westminster, Canary Wharf, and other high-density areas. If you have available commercial properties and want to explore nursery tenancy, contact us at via the below form to discuss how we can convert your empty spaces into thriving early education centres.

By working together, we can turn unused commercial spaces into vibrant community assets, support working families, and create sustainable property investments for the future.

Let’s build a better urban landscape—one nursery at a time.