Vacant retail units ‘should be converted into 800,000 new homes’ says think tank


The Social Market Foundation is urging ministers to convert the nation’s vacant retail units into housing, suggesting that the coronavirus outbreak has caused a lasting change to our shopping habits.

Last week, Advantage wrote about the government’s new planning rules, which will cut bureaucracy and will mean that full planning applications won’t be needed to turn vacant shops into new homes.

The SMF calls upon ministers to go further, stating:

“COVID-19 is catalysing changes to our working and consumer habits. This is likely to have a significant impact on town and city centres. Rather than letting our high streets fade into obscurity, politicians can create an ambitious vision of repurposed urban space and reinvigorated communities.”

Key points from the SMF report are that:

  • Emerging evidence suggests that lockdown will change consumer and business behaviour on a long-lasting basis, with a permanent shift to homeworking and digital retail.
  • This change will impact urban spaces, risking widening income and wealth inequality. Reduced commuting costs will benefit white collar professionals, while those working in retail face widespread job losses.

They think tank has made the following recommendations:

  • retail unitsA nationwide program of repurposing city and town centres should be introduced. This would see vacant retail space converted into residential property. Replacing commercial space with residential property could, under conservative assumptions, create 800,000 additional homes.
  • A write off of the £80bn in local government debt sitting on the Public Works Loan Board’s loan book, to stimulate new investment in community assets in town and city centres. This would essentially transfer local government debt into the hands of central government, which is better-placed to service the debt. A debt write-off would liberate local authorities to invest in urban renewal projects – including the creation of new schools, parks, and sports facilities.
  • Designating areas at risk of urban decline due to loss of retail and office space as Economic Growth Areas (EGAs). EGAs would offer tax incentives for firms moving into these areas, with tax incentives contingent on the hiring of local workers – particularly those that have lost work as a result of economic change accelerated by the coronavirus crisis.

Advantage’s view

Converting former retail units or offices into homes is, of course, nothing new. Prior to the coronavirus outbreak, we wrote about Permitted Development Rights, noting that our experts are often contacted by potential clients who are converting existing commercial spaces (such as offices or retail spaces) into residential units, and we work with them at every stage of the project to ensure that they have the appropriate cover in place.

What we said then: Office conversions are particularly popular, and at a time when much is being written about the under-supply of new housing in the UK, they can transform redundant office space into prime residential space.

What we think now: The question is how swiftly the demand for this type of conversion is likely to accelerate in light of new planning rules and changes in how we use the high street. Although a number of newspapers have picked up on the SMF report, in some cases implying that our high streets are in terminal decline, the benefits of converting commercial spaces should, of course,  always be considered on a case by case basis. In some areas, the demand for prime office or retail space is likely to remain robust. However, we anticipate that even if retail to resi conversions don’t skyrocket in the way the current headlines may suggest, they’ll remain popular, given their undeniable appeal to developers and property owners seeking to breathe new life into existing buildings and maximise returns.

If you require a structural warranty for a conversion, a new development, or an existing property, please call: 0845 900 3969, email: sales@ahci.co.uk or pay a visit to our homepage: https://ahci.co.uk/

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Advantage Home Construction Insurance (AHCI) provides structural defects insurance – operating nationally with offices in Warrington, London and Birmingham – offering development-related insurances and a service designed to give customers peace of mind.

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