Planning use classes for care and supported housing

Planning use classes determine how a building may lawfully be used, and they sit at the heart of any care or supported housing project, because the class a scheme falls into affects whether planning permission is needed, what conditions apply, and how the finished asset is valued and financed. Care homes, supported living, extra care and supported housing HMOs do not all share one class, and getting the classification right is one of the first things to settle on any deal.

This guide explains the relevant use classes, C2 residential institutions, C3 dwellinghouses and the sui generis category, how change of use works, and why the class affects your finance. We arrange finance for care and supported housing as a broker and introducer. We are not town planners, a lender or a law firm, and nothing here is planning, investment or legal advice; take professional planning advice on any scheme.

What is use class C2?

Use class C2, residential institutions, covers residential accommodation and care for people in need of care, including residential care homes and nursing homes, as well as hospitals and residential schools. A registered care home where residents receive care as part of an institutional package generally falls within C2, because the defining feature is the provision of care alongside accommodation in a managed setting.

C2 is the natural home for the trading care home end of the sector. Extra care and some supported living schemes can also fall within C2 where the level of care and the communal, managed nature of the scheme make it institutional in character. Because C2 is a recognised, well-understood class, a building correctly within it has a clear planning basis that lenders and valuers can rely on, which is part of why establishing the class early matters for finance.

What is use class C3, and where does supported living sit?

Use class C3, dwellinghouses, covers use as a dwelling by a single household, including small groups living together as a single household and receiving care. This is significant for supported living, because some supported living arrangements, particularly where a small number of people live together as a household with support, fall within C3 rather than C2. A C3 supported living scheme is treated, in planning terms, much like ordinary residential housing.

Where supported living sits within C3 there may be no need for a change of use from an existing dwelling, which can simplify a conversion. But the line between C3, C2 and sui generis is not always clear, and it turns on the specifics of how many people live in the scheme, how independently, and what level of care is provided. This is exactly the kind of question that needs professional planning advice on the individual scheme, because getting it wrong can stall both the project and its finance.

What does sui generis mean for supported housing?

Sui generis, meaning of its own kind, is the category for uses that do not fit any defined use class. Some supported housing arrangements fall here, most notably larger houses in multiple occupation. A small HMO can fall within class C4, but a large HMO, typically one occupied by more than six unrelated people sharing facilities, is sui generis and needs its own planning consideration, and supported housing HMOs are often in this territory.

For supported housing investors converting larger residential buildings into shared supported accommodation, the sui generis question is a live one, because a change to a sui generis use generally requires planning permission and may attract licensing requirements as well. A scheme treated as sui generis is not automatically harder to deliver, but it does need its planning position established explicitly rather than assumed, which again is a matter for professional planning advice on the specific building and support model.

How does change of use work?

Change of use is the process of altering the planning use of a building from one class to another, and whether it needs permission depends on the classes involved and the specifics of the scheme. Moving an existing dwelling used within C3 into a C2 care use, or converting a building into a sui generis large HMO, generally requires planning permission, whereas some changes are permitted without a full application. The detail varies, and permitted development rights and local policies both bear on it.

For a care or supported housing project the practical sequence is to establish the building's current use class, determine the class the finished scheme will need, and resolve any required change of use as an explicit workstream early in the project. Local authorities also vary in how they treat supported housing, and some areas with concentrations of exempt accommodation have introduced additional controls. Settling the planning position before committing significant cost, and certainly before drawing development finance, is the disciplined approach.

Why does the use class affect your finance?

Lenders treat the planning position as a core part of the credit decision, because it determines whether the scheme can lawfully operate and how the finished asset will be valued. A building with a clear, correct use class and any necessary consents in place is financeable; one with an unresolved or contested planning position is not, or only on cautious terms. The use class also feeds into the valuation, because a care home valued as a going concern, a supported living scheme valued on its lease, and a residential building valued on bricks and mortar are different propositions.

Where a scheme needs a change of use that is not yet secured, lenders may fund the land purchase with a bridge and provide development or term finance only once the planning is settled. The cleaner the planning position, the keener the finance terms and the wider the choice of lender. This is why we encourage clients to resolve the use class and any consents up front, and we arrange the bridging, development and term finance around that planning position as a broker and introducer, not a lender.