Closing down sales
Why transforming boarded-up shops into homes would be a mixed blessing for the high street
‘Changing shops into homes is not going to create a vibrant place where people want to go and spend their money’
Converting empty shops into homes has been hailed as a way to both tackle the housing crisis and revitalise town centres. However, critics fear that new legislation making residential conversions easier could have the opposite effect and kill off high streets rather than save them.
A change to permitted development rights (PDR) in England at the start of this month means most commercial buildings including shops, restaurants and gyms can now be converted into homes without planning permission.
These premises need only be vacant for three months before such rights can be applied, potentially opening the door to many more retail-to-residential developments.
Since new rules making it easier to convert commercial premises to residential came into effect in 2015, 72,000 new homes were constructed in the five years to March 2020, according to the Ministry of Housing, Communities and Local Government.
However, critics say that these developments are coming at the expense of the high street. “I can see many high streets being severely curtailed,” says Rico Wojtulewicz at the National Federation of Builders.
He predicts that landlords will be eager to convert commercial buildings into homes because of the higher returns that housing can generate. Analysis of land registry records by Nimbus Maps suggests that landlords could make as much as £14bn through residential conversions.
The newly reduced red tape is another aspect that makes PDR attractive to developers and investors. A limit of 1,500 sq metres (16,000 sq ft) of floor space for conversions means large office blocks are less likely to be converted through the process.
Ritchie Clapson, co-founder of propertyceo, says this also means that PDR is suited to small-scale developers as “transforming a small retail or office unit into flats is too small for large house builders and even mediumsized developers to be interested in”.
Local authorities warn that more housing alone will not lead to a high street renaissance. Danny Beales, Camden council’s member for planning, says: “Our assessment is that rather than strengthening high streets which have faced a difficult period over the pandemic, it would be the death of many of them. Changing shops into homes is not going to create a vibrant place where people want to go and spend their money.”
Clapson concurs that ensuring the right mix of developments is essential to avoid turning “our towns into an endless residential landscape”.
Research by the Town and Country Planning Association and University College London suggests that 89pc of shops and other commercial buildings in the London Borough of Barnet could be lost to residential conversions under the new PDR rules. In Leicester and Crawley the figure could be 77pc.
“Once they go, they won’t be coming back so it’s a permanent loss,” Wojtulewicz says.
Julia Park, head of housing research at Levitt Bernstein, says that while nobody wants boarded-up shops, almost everything else should be considered before they are converted into homes. She argues that the task requires planning scrutiny.
“I know that may not be popular,” Park says, “it takes longer to get planning permission than prior approval for PDR and it costs a few thousand pounds more, but these changes are going to be irreversible, so isn’t it worth that extra time and cost?”
Park says using PDR in the right location is crucial. She is comfortable with it “being done in a managed way by shrinking from the edges” but argues that the process risks disaster “if homes are just peppered around at random in the centre of high streets”.
A housing ministry spokesman says new regulations mean that “all new homes must be of high quality and meet legal space standards and building regulations”.
However, the rise in demand during the pandemic for properties with outdoor space means the lack of gardens in some developments could be problematic.
Park says another issue with PDR is that it does not permit changes to the facade of buildings: “How is that going to work when you start with a huge shop window which doesn’t even open, and a commercial size glazed door?”
Yet Wojtulewicz says he sympathises with the Government’s decision to loosen PDR rules. “They have done everything they can to try to get homes built within the current planning system and it has not worked.” He says councils have failed to solve the housing crisis and suggests those not meeting their housing delivery tests should be subject to PDR.
Councils are able to block all developments under PDR by issuing Article 4 directions. However, the Government has taken steps to raise the threshold under which they can be granted, with Robert Jenrick, the Housing Secretary, stating they should apply to “the smallest area possible”.
Despite this, almost 20 London councils have introduced or are planning to bring in such measures.
Clapson warns that these directions are “potentially a sledgehammer approach” and risk “undermining the high street rejuvenation efforts in the process” by blocking development.
Reinventing high streets requires more than just new housing, argues Wojtulewicz. “PDR for mixed use development is quite helpful,” he adds, “because there is merit in having homes on top of shops and the Government has a new PDR where you can add extra floors to homes. Now that may be quite a good solution to reinventing what the high street is or might be.”
The high street has changed, Wojtulewicz says, but we “don’t really understand yet what the new one will look like”.